If Degree Wellness operates other healthcare-related companies or franchises, is Degree Wellness obligated to compensate the franchisee?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
We and our affiliates reserve the right to engage in any activities we deem appropriate that your Franchise Agreement does not expressly prohibit, whenever and wherever we desire, including the right to (a) operate, or grant to others the right to operate, Degree Wellness Studio franchises physically located outside of your Protected Territory on terms and conditions we deem appropriate; and (b) offer or operate other healthcare-related companies or franchises, or enter into other lines of business, offering products and services that are similar or dissimilar to those offered by Degree Wellness franchises, both in and outside of your Protected Territory, under trademarks and service marks other than the Marks without any compensation to you, and to use other channels of distribution (for example, the internet, email, social media, telemarketing, or other direct marketing) in connection with such system(s) and/or location(s); (c) the right to sell or distribute, at retail or wholesale, directly or indirectly, or via the internet or any other means, or license others to sell or distribute, via any means (including the internet and other channels of distribution) any products that bear any proprietary marks, including the Marks, whether within or outside your Protected Territory; (d) the right to own, acquire, establish, and/or operate, and license others to establish and operate, businesses different from Degree Wellness franchises but operated under the Marks within or outside your Protected Territory, and to use other channels of distribution (for example, the internet, email, social media, telemarketing, or other direct marketing) in connection with such system(s) and/or location(s); and (e) the right to be acquired (whether though acquisition of assets, or equity interests or otherwise, regardless of the form of transaction) by a business or entity providing products and services similar to those provided by Degree Wellness franchises even if that business or entity operates, franchises, or licenses competitive businesses in your Protected Territory. We and our affiliates have used and reserve the right to use other channels of distribution, such as the internet, catalog sales, telemarketing, and other direct marketing, to make or solicit such sales under trademarks and service marks other than the Marks.
Source: Item 12 — Territory (FDD pages 42–44)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, Degree Wellness and its affiliates retain specific rights regarding other business ventures, including healthcare-related ones. Specifically, Degree Wellness reserves the right to operate or franchise other healthcare-related companies, offering similar or dissimilar products and services to those offered by Degree Wellness franchises, both inside and outside a franchisee's protected territory. These ventures may operate under trademarks and service marks different from those used by Degree Wellness.
Importantly, Degree Wellness is not obligated to provide any compensation to the franchisee in such cases. This means that Degree Wellness could potentially operate competing businesses or franchises without sharing any of the revenue or profits generated from those ventures with its franchisees. This lack of compensation applies regardless of whether these other businesses operate within or outside the franchisee's protected territory.
This policy has significant implications for prospective Degree Wellness franchisees. It highlights a potential risk where Degree Wellness could engage in activities that directly compete with a franchisee's business without any obligation to compensate them. Franchisees should carefully consider this when evaluating the potential profitability and market exclusivity of a Degree Wellness franchise, as the franchisor retains considerable freedom to operate other businesses, even those that might be considered competitive, without providing any financial benefit to the franchisee.