If a Degree Wellness franchisee's lease is terminated, does it matter why the lease was terminated?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
In the event of Franchisee's default under the terms of the Lease, Landlord shall promptly deliver notice of such default to Franchisor and shall offer Franchisor the opportunity to cure the default and to assume the Lease in Franchisor's name.
If Franchisor elects to cure the default and assume the Lease, Franchisor, within 10 days of its receipt of notice from Landlord, shall notify Landlord of its intent to cure such default and to assume the Lease.
If Franchisor elects to cure the default, it shall cure the default within 30 days of such election or, if the default cannot be reasonably cured within such 30-day period, then Franchisor will commence and proceed to cure the default within such time as is reasonably necessary to cure the default.
If Franchisor elects to assume the Lease, Landlord agrees to recognize Franchisor as the tenant under the Lease and Franchisee will no longer have any rights there under.
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- Franchisee will be permitted to assign the Lease to Franchisor or its affiliates upon the expiration (without renewal) or earlier termination of the Franchise Agreement and the Landlord hereby consents to such assignment and agrees not to impose or assess any assignment fee or similar charge or accelerate rent under the Lease in connection with such assignment, or require Franchisor to pay any past due rent or other financial obligation of Franchisee to Landlord, it being understood that Landlord will look solely to the Franchisee for any rents or other financial obligations owed to Landlord prior to such assignment.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
The 2025 Degree Wellness Franchise Disclosure Document (FDD) outlines specific procedures and rights related to lease termination, but it does not explicitly state whether the reason for the lease termination affects these procedures. The FDD emphasizes Degree Wellness's right to protect its brand and system, including the ability to cure defaults and assume the lease if a franchisee defaults.
Specifically, if a Degree Wellness franchisee defaults on their lease, the landlord must notify Degree Wellness and offer them the opportunity to cure the default and assume the lease. If Degree Wellness elects to cure the default, they have 10 days to notify the landlord of their intent and then 30 days (or a reasonable time if more is needed) to cure the default. If Degree Wellness assumes the lease, the franchisee no longer has any rights under it. Additionally, upon the expiration or earlier termination of the franchise agreement, the franchisee can assign the lease to Degree Wellness or its affiliates, which the landlord consents to without any assignment fees or rent acceleration.
However, the FDD does not detail how these procedures might differ based on the cause of the lease termination (e.g., franchisee default vs. landlord decision not to renew). A prospective franchisee should seek clarification from Degree Wellness regarding scenarios where the lease is terminated for different reasons and how that impacts their obligations and Degree Wellness's rights.