For Degree Wellness, what information is required regarding the ownership interests in the Franchise Owner?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
14.2 Interests in Franchise Owner; Reference to Exhibit 2. You and each Principal Owner represent, warrant, and agree that all "Interests" in Franchise Owner are owned in the amount and manner described in Exhibit 2. No Interests in Franchise Owner will, during the Term of this Agreement, be "public" securities (i.e., securities that require, for their issuance, registration with any state or federal authority). (An "Interest" is defined to mean any shares, units, membership interests, or partnership interests of Franchise Owner and any other equitable or legal right in any of Franchise Owner's stock, revenues, profits, rights, or assets. When referring to Franchise Owner's rights or assets, an "Interest" means this Agreement, Franchise Owner's rights under and interest in this Agreement, any Degree Wellness franchise, and the revenues, profits or assets of any Degree Wellness franchise.) You and each Principal Owner also represent, warrant, and agree that no Principal Owner's Interest has been given as security for any obligation (i.e., no one has a lien on or security interest in a Principal Owner's Interest), and that no change will be made in the ownership of an Interest other than as expressly permitted by this Agreement or
as we may otherwise approve in writing. You and each Principal Owner agree to furnish us with such evidence as we may request from time to time to assure ourselves that the Interests of Franchise Owner and each of your Principal Owners remain as permitted by this Agreement, including a list of all persons or entities owning any Interest, as defined above.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, the franchise agreement stipulates that all ownership interests in the Franchise Owner must be detailed in Exhibit 2 of the agreement. Franchisees and Principal Owners must confirm that the ownership interests are held as described in Exhibit 2. These interests cannot be "public" securities requiring registration with state or federal authorities during the agreement's term. An "Interest" includes any shares, units, membership interests, or partnership interests in the Franchise Owner, as well as any equitable or legal right to the Franchise Owner's stock, revenues, profits, rights, or assets, including the franchise agreement itself and any Degree Wellness franchise.
Furthermore, Principal Owners must confirm that their interests are not used as security for any obligation, such as a lien or security interest. Any changes in ownership require express permission within the agreement or written approval from Degree Wellness. Franchisees and Principal Owners must provide evidence upon request to ensure that the ownership interests remain compliant with the agreement, including a list of all individuals or entities holding any interest.
This level of detail and control allows Degree Wellness to maintain oversight of who owns and controls its franchises, ensuring compliance with its standards and protecting its brand. Prospective franchisees should carefully review Exhibit 2 and understand all requirements related to ownership interests, as any deviation could potentially lead to a breach of the franchise agreement.