If a Degree Wellness franchisee's lease is terminated, is that considered an event of default?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
- 15.1 Event of Default. Subject to applicable law, you will be deemed to be in default under this Agreement, and we will have the right to terminate this Agreement effective upon delivery of notice of termination to you, subject only to any right to cure to the extent expressly set forth below or mandated pursuant to applicable law, if:
- b. you abandon, surrender, transfer control of, lose the right to occupy the Premises of, or do not actively operate, the Franchise, or your lease for or purchase of the location of the Franchise is terminated for any reason;
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, the termination of a franchisee's lease is considered an event of default. Specifically, if the lease for the location of the Degree Wellness franchise is terminated for any reason, it constitutes a default under the Franchise Agreement.
This means that Degree Wellness has the right to terminate the Franchise Agreement if the franchisee's lease is terminated. This is a significant risk for franchisees, as losing the lease can lead to the loss of the entire franchise. Franchisees should ensure they have strong lease agreements with their landlords and maintain a good relationship to avoid lease termination.
In the event of a default, Degree Wellness has various remedies, including terminating the agreement. Upon termination due to default, all rights granted to the franchisee immediately revert to Degree Wellness. The franchisee may also be required to pay a termination fee, which is one-half of the then-current initial franchise fee for new Degree Wellness Studio franchises, along with other applicable damages and costs.