Can a Degree Wellness franchisee prepay the note to Degree Financial without penalty?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
You must waive your rights to certain notices of a collection action in our promissory note, security agreement and guaranty but there are no waivers of defense in the promissory note, security agreement or guaranty. If you are a legal entity, your shareholders, members, partners and/or owners must personally guarantee the debt and agree to pay the entire debt and all collection costs. Degree Financial has the right to require a spouse's personal guaranty.
Our Degree Financial may sell, assign or discount any promissory note or other obligation arising out of the franchise agreement to a third party. If it sells or assigns your promissory note, it will not affect our obligation to provide the services to you that are described in the franchise agreement but the third party may be immune under the law to any defenses to payment you may have against our affiliate.
We may periodically agree with third-party lenders to make financing available to our qualified franchisees and we may, in our sole discretion, refer you to a third-party lender for financing. We have no control over whether financing will be offered to you by any third-party lender. The lender is not obligated to provide financing to you or to any other franchisee that the lender finds does not meet its credit requirements and loan criteria. If we refer you to a third-party lender for financing, we may agree to take a short-term promissory note (in a form we provide to you) until your financing is arranged. You must use the proceeds from the lender to pay any promissory note to us.
We do not currently derive income from referrals or placement of financing with any thirdparty lender. However, we may require payment from you or other persons for the placement of financing in the future. If we charge for placing financing in the future, we expect to use the payments to offset our expenses in doing so.
We do not guarantee your obligations to third parties.
Source: Item 10 — Financing (FDD pages 31–32)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the excerpt provided does not specify whether a Degree Wellness franchisee can prepay a note to Degree Financial without incurring a penalty. The document outlines the financing arrangements that Degree Wellness may offer, including promissory notes and potential referrals to third-party lenders. It also mentions that Degree Financial, an affiliate, provides limited financial services. However, the FDD does not explicitly address prepayment terms or penalties associated with these notes.
Given the absence of specific details regarding prepayment penalties, it is essential for a prospective Degree Wellness franchisee to directly inquire with Degree Financial about the terms and conditions of any promissory notes. This inquiry should clarify whether prepayment is allowed and if any penalties apply. Understanding these terms is crucial for financial planning and managing debt obligations.
In summary, while the FDD discusses financing options and the role of Degree Financial, it does not provide information on prepayment penalties. A potential franchisee should seek explicit clarification from the franchisor or Degree Financial to fully understand the financial obligations and flexibility associated with any financing agreements.