factual

Does the lien granted to Degree Wellness under the Degree Wellness Agreement extend to insurance proceeds?

Degree_Wellness Franchise · 2025 FDD

Answer from 2025 FDD Document

  • 17.4 Lien.

To secure your performance under this Agreement and indebtedness for all sums due us or our affiliates, we shall have a lien upon, and you hereby grant us a security interest in, the following collateral and any and all additions, accessions, and substitutions to or for it and the proceeds from all of the same: (a) all inventory now owned or after-acquired by the Franchise, including but not limited to all inventory and supplies transferred to or acquired by you in connection with this Agreement; (b) all accounts of the Franchise now existing or subsequently arising, together with all interest in the Franchise, now existing or subsequently arising, together with all chattel paper, documents, and instruments relating to such accounts; (c) all contract rights of the Franchise, now existing or subsequently arising including, without limitation, accounts receivable and other contractual rights to payment from others; (d) all general intangibles of the Franchise, now owned or existing, or after-acquired or subsequently arising including, without limitation, all awards, damages, payments, escrowed monies, insurance proceeds, and interest, fees, charges or payments accruing on or received from or to be received on any of the foregoing in any way; and (e) all products, proceeds, substitutions, and replacements of any of the above described collateral.

You agree to execute such financing statements, instruments, and other documents, in a form satisfactory to us, that we deem necessary so that we may establish and maintain a valid security interest in and to these assets, and you authorize us to file, without your signature, such financing statements as we shall deem necessary or advisable to reflect the security interest granted herein.

Source: Item 23 — Receipts (FDD pages 66–257)

What This Means (2025 FDD)

According to Degree Wellness's 2025 Franchise Disclosure Document, the lien granted to Degree Wellness does extend to insurance proceeds. Degree Wellness is granted a security interest in various forms of collateral to secure the franchisee's performance under the agreement and any debts owed to Degree Wellness or its affiliates. This collateral includes inventory, accounts, contract rights, and general intangibles of the franchise.

Specifically, the lien extends to all general intangibles of the franchise, encompassing awards, damages, payments, escrowed monies, insurance proceeds, and any interest, fees, charges, or payments accruing on or received from any of the aforementioned items. This means that if a Degree Wellness franchisee receives insurance proceeds for any reason, those proceeds are subject to the lien held by Degree Wellness.

This provision is significant for prospective franchisees as it means that Degree Wellness has a claim on insurance payouts related to the franchise. Franchisees need to be aware that any insurance proceeds they receive could be used to satisfy outstanding debts or obligations to Degree Wellness. Franchisees should consult with legal and financial advisors to fully understand the implications of this lien and how it may affect their business operations and financial obligations.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.