Can a Degree Wellness franchisee set-off any amounts due to Degree Wellness based on alleged non-performance?

According to Degree Wellness's 2025 Franchise Disclosure Document, a franchisee is not permitted to withhold payments of Continuing Franchise Fees or any other amounts owed to Degree Wellness or its affiliates based on alleged non-performance by Degree Wellness of its obligations under the Franchise Agreement. This means that even if a franchisee believes Degree Wellness is not fulfilling its obligations, the franchisee must continue to make all required payments.

This policy is fairly common in franchising, as it ensures a steady revenue stream for the franchisor, which is essential for supporting the franchise system. However, it places a significant financial burden on the franchisee, who must continue to pay fees even if they believe they are not receiving the support or services they are entitled to.

If a Degree Wellness franchisee believes that Degree Wellness is in breach of its obligations, the franchisee's recourse is typically to pursue legal action while still meeting their financial obligations to the franchisor. Failure to make required payments could result in penalties, termination of the franchise agreement, and other legal consequences. Prospective franchisees should carefully consider this provision and seek legal advice to understand their rights and obligations under the Franchise Agreement.