What is the Degree Wellness franchisee's obligation if a minority owner transfers their interest?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
- d.
Interests owned by persons other than the Principal Owners ("minority owners") may be Transferred without our advance consent unless the Transfer would give that transferee and any person or group of persons affiliated or having a common interest with the transferee more than a collective twentyfive percent (25%) Interest in Franchise Owner, in which case our advance written approval for the Transfer must be obtained.
In the event of any minority owner transfer, you will promptly notify us of the change in ownership or Interests.
Your formal partnership, corporation or other formation documents and all stock certificates, partnership units or other evidence of ownership must recite or bear a legend reflecting the transfer restrictions of this Paragraph 14.4.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, a franchisee must promptly notify Degree Wellness of any change in ownership or interests resulting from a minority owner transfer. This obligation is in place to ensure Degree Wellness is aware of who holds interests in its franchises.
However, the FDD stipulates that minority owner interests can be transferred without Degree Wellness's advance consent, unless the transfer would result in the transferee and their affiliates holding more than a collective 25% interest in the Franchise Owner. In such cases, the franchisee must obtain Degree Wellness's advance written approval before the transfer can proceed. This provision allows Degree Wellness to maintain control over significant ownership changes within its franchises.
The franchisee is also responsible for ensuring that the formal partnership, corporation, or other formation documents, along with all stock certificates, partnership units, or other evidence of ownership, include a statement or legend that reflects the transfer restrictions outlined in Paragraph 14.4 of the franchise agreement. This requirement serves as a constant reminder of the transfer limitations and ensures that all owners are aware of these restrictions. This is a fairly standard clause in franchise agreements, as franchisors want to maintain control over who their franchisees are.