What happens if a Degree Wellness franchisee defaults on their loan from Degree Financial?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
t from you. We may terminate your franchise agreement if you do not pay Degree Financial.
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.
Source: Item 10 — Financing (FDD pages 31–32)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, if a franchisee defaults on a loan from Degree Financial, several actions can be taken. The franchisee must waive their rights to certain notices of a collection action in the promissory note, security agreement, and guaranty. However, there are no waivers of defense in those documents. If the franchisee is a legal entity, its shareholders, members, partners, and/or owners must personally guarantee the debt and agree to pay the entire debt and all collection costs, and Degree Financial has the right to require a spouse's personal guaranty.
Degree Financial has the right to sell, assign, or discount any promissory note or other obligation arising out of the franchise agreement to a third party. If Degree Financial sells or assigns the promissory note, it will not affect Degree Wellness's obligation to provide services to the franchisee as described in the franchise agreement. However, the third party may be immune under the law to any defenses to payment the franchisee may have against Degree Wellness's affiliate.
In the event a franchisee does not comply with the franchise agreement, Degree Wellness may deny access to the Degree Wellness website or Intranet, remove the Franchised Business from the Franchised Business locator page and/or remove interior pages on the Degree Wellness Website, remove the Franchised Business from the list of Franchised Businesses to which inquiries are referred, remove the Franchised Business from the list of Franchised Businesses that are entitled to Degree Wellness-related discounts from approved vendors, and/or remove the Franchised Business from the list of Franchised Businesses that are approved to participate in national or other alliance programs. Degree Wellness may take any or all of these actions in addition to or instead of giving notice of default and/or termination under the Agreement.