Can Degree Wellness's Management Company increase or decrease the required amounts of insurance coverage?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
MENT SHALL BE INTERPRETED AS DIRECTING OR INFLUENCING SUCH REFERRALS. NONE OF MANAGEMENT COMPANY'S SERVICES HEREUNDER SHALL CONSTITUTE OBLIGATIONS OF MANAGEMENT COMPANY TO GENERATE PATIENTS TO LICENSED PROVIDER.
8. Insurance.
- 8.1 During the Agreement Term, Licensed Provider must maintain in force, under policies of insurance issued by carriers in good standing in the state where the Premises is located: (1) comprehensive commercial general liability and motor vehicle liability insurance against claims for bodily and personal injury, death and property damage caused by or occurring in conjunction with the operation of the Studio or otherwise in conjunction with the performance of the Licensed Provider Services pursuant to this Agreement, under one or more policies of insurance containing minimum liability coverage of not less than $1,000,000 per occurrence and $3,000,000 in the aggregate; (2) worker's compensation and employer's liability insurance as required by law, with limits equal to or in excess of those required by statute; (3) professional liability (malpractice) insurance, for each doctor providing the Licensed Provider Services, having limits of not less than $1,000,000 per occurrence and $3,000,000 in the aggregate; and (4) any other insurance required by applicable law, rule, regulation, ordinance or licensing requirements. Management Company may periodically increase or decrease the amounts of coverage required under these insurance policies, and/or require different or additional kinds of insurance, including excess liability insurance, to reflect inflation, identification of new risks, changes in law or standards of liability, higher damage awards, or other relevant changes
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, the Management Company has the authority to adjust the required insurance coverage amounts for franchisees. Specifically, the Management Company can periodically increase or decrease the amounts of coverage required under the insurance policies. They can also require different or additional kinds of insurance. These changes can be made to reflect factors such as inflation, the identification of new risks, changes in law or standards of liability, higher damage awards, or other relevant changes in circumstances.
Degree Wellness requires franchisees to maintain certain insurance policies, including comprehensive commercial general liability and motor vehicle liability insurance with minimum liability coverage of $1,000,000 per occurrence and $3,000,000 in the aggregate. They must also have worker's compensation and employer's liability insurance as required by law, and professional liability (malpractice) insurance for each doctor providing services, with limits of not less than $1,000,000 per occurrence and $3,000,000 in the aggregate. Franchisees must also carry any other insurance required by applicable law, rule, regulation, ordinance or licensing requirements.
This flexibility in insurance requirements means that a Degree Wellness franchisee's costs for insurance could change over time. It is important for prospective franchisees to factor in potential increases in insurance costs when evaluating the financial feasibility of the franchise. Franchisees should stay informed of any changes to insurance requirements and understand the reasons behind them to ensure they maintain adequate coverage and remain compliant with the franchise agreement.
It is also important to note that compliance with state minimum insurance requirements does not relieve the franchisee from the obligation to comply with the contractual insurance requirements outlined in the agreement with Degree Wellness. Franchisees are advised to consult with their own insurance agents, brokers, and attorneys to determine what types of coverages and what level of insurance protection they may need or desire, in addition to the coverages and minimum limits specified by the Management Company.