What happens to the restrictive covenants in Article 9 of the Degree Wellness agreement upon transfer?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
te family or of the immediate family of any Principal Owner, will directly or indirectly (a) solicit for wellness or related services or products with any person who was a member or client of the Franchise within the two year period prior to such Transfer, termination or expiration; or (b) interfere with our relationship with any of our franchisees, vendors, suppliers or referral sources.
- d. General Managers to Sign Agreement. You further agree that you will cause each General Manager to enter into and deliver to us a Restrictive Covenant Agreement in such form as we may approve, either concurrently with the execution of this Agreement or at such later date when the affiliation of such person with you is established.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, the duties and obligations imposed in the Restrictive Covenant Agreement survive the transfer, expiration, or earlier termination of the agreement. Additionally, the franchisee's duties and obligations regarding confidential information also survive the transfer, termination, or expiration of the agreement. This means that even if the Degree Wellness franchise is sold or the agreement ends, the restrictions on competition and the obligation to protect confidential information remain in effect.
Specifically, the FDD highlights that franchisees must ensure their General Managers enter into a Restrictive Covenant Agreement, the duties and obligations of which survive the transfer, expiration, or earlier termination of the Franchise Agreement. This ensures that key personnel are also bound by these restrictions, regardless of changes in ownership or the agreement's status. Degree Wellness is not obligated to enforce these agreements for the franchisee's benefit.
These stipulations are designed to protect Degree Wellness's confidential information and maintain a competitive balance within its franchise system. Prospective franchisees should carefully review Article 9 and the Restrictive Covenant Agreement to fully understand the scope and duration of these obligations. They should also consider the implications of these surviving obligations when planning for the potential sale or transfer of their Degree Wellness franchise.