Is a Licensed Provider required to ensure their employees enter into a Restrictive Covenant Agreement with the Management Company, as part of the Degree Wellness agreement?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
- 10.4 Licensed Provider further agrees that it will cause Licensed Provider's employees to enter into and deliver to Management Company a "Restrictive Covenant Agreement" in such form as Management Company may prescribe, either concurrently with the execution of this Agreement or at such later date as determined by Management Company.
- 10.5. Licensed Provider acknowledges and agrees that a breach of any provision of this Section 10 would cause immediate and irreparable harm to Management Company and Degree Wellness. Therefore, Licensed Provider acknowledges and agrees that the foregoing restraints are fair and reasonable, are required for the protection of Management Company's and Degree Wellness's legitimate business interests, and do not impose any undue hardship on Licensed Provider. Degree Wellness shall be deemed to be a third party beneficiary of all of the covenants contained in this Section 10.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 63–66)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, a Licensed Provider is required to ensure their employees enter into a Restrictive Covenant Agreement with the Management Company. Specifically, the Licensed Provider must ensure that their employees execute and deliver this agreement to the Management Company. The Management Company prescribes the form of this agreement, and it can be implemented either at the time of the agreement's execution or at a later date determined by the Management Company.
This requirement is designed to protect the Management Company and Degree Wellness's interests by preventing employees of the Licensed Provider from actions that could harm the business. These restrictive covenants typically include clauses related to non-disclosure, non-competition, and non-solicitation, ensuring that confidential information remains protected and that employees do not unfairly compete or solicit clients or employees.
The FDD emphasizes the importance of these restrictive covenants by stating that a breach of these provisions would cause immediate and irreparable harm to both the Management Company and Degree Wellness. As a result, the Licensed Provider acknowledges that these restraints are fair, reasonable, and necessary to protect the legitimate business interests of both entities. Degree Wellness is also identified as a third-party beneficiary of these covenants, giving them additional rights to enforce these provisions.
For a prospective franchisee, this means they must ensure their employees are willing to sign and adhere to the Restrictive Covenant Agreement. Failure to enforce this requirement could result in legal repercussions and potential damage to the Degree Wellness brand and business network. It is crucial for the Licensed Provider to understand the terms of the agreement and communicate them clearly to their employees to avoid any misunderstandings or breaches.