What happens if a Degree Wellness Franchise Agreement entered into to fulfill development obligations is terminated?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor will have the right, at its option, to terminate this Agreement and all rights granted to Developer hereunder, without affording Developer any opportunity to cure such default, effective upon written notice to Developer, upon the occurrence of any of the following events: (i) if
Developer ceases to actively engage in development activities in the Site Selection Area or otherwise abandons its development business for three consecutive months, or any shorter period that indicates an objective intent by Developer to discontinue development of the Studios within the Site Selection Area; (ii) if Developer becomes insolvent or is adjudicated bankrupt, or if any action is taken by Developer, or by others against the Developer, under any insolvency, bankruptcy or reorganization act, or if Developer makes an assignment for the benefit of creditors or a receiver is appointed by the Developer; (iii) if Developer fails to meet its development obligations under the Development Schedule for any single Development Period, and fails to cure such default within 30 days of receiving notice thereof; and (iv) if any Franchise Agreement that is entered into in order to fulfill Developer's development obligations under this Agreement is terminated or subject to termination by Franchisor, pursuant to the terms of that Franchise Agreement.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, if any Franchise Agreement entered into to fulfill a developer's obligations is terminated or subject to termination by Degree Wellness, the franchisor has the right to terminate the Development Agreement. This termination is effective immediately upon written notice to the developer and does not require an opportunity to cure the default.
This means that if a Degree Wellness franchisee who has a Development Agreement fails to meet the terms of their individual Franchise Agreement for a specific studio, Degree Wellness can terminate not only that Franchise Agreement but also the entire Development Agreement. The Development Agreement outlines the schedule and requirements for opening multiple Degree Wellness studios within a specific area.
This clause creates a significant risk for Degree Wellness developers. Failure to comply with the terms of one franchise location can jeopardize the developer's rights to open any remaining locations under the Development Agreement. Prospective developers should carefully review the terms of both the Development Agreement and the individual Franchise Agreements to fully understand their obligations and the potential consequences of failing to meet those obligations.