Can minority owners in a Degree Wellness franchise transfer their interests freely?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
- d.
Interests owned by persons other than the Principal Owners ("minority owners") may be Transferred without our advance consent unless the Transfer would give that transferee and any person or group of persons affiliated or having a common interest with the transferee more than a collective twentyfive percent (25%) Interest in Franchise Owner, in which case our advance written approval for the Transfer must be obtained.
In the event of any minority owner transfer, you will promptly notify us of the change in ownership or Interests.
Your formal partnership, corporation or other formation documents and all stock certificates, partnership units or other evidence of ownership must recite or bear a legend reflecting the transfer restrictions of this Paragraph 14.4.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, minority owners (those who are not Principal Owners) have some freedom to transfer their interests without needing advance consent from Degree Wellness, subject to certain conditions. Specifically, a minority owner can transfer their interests freely unless the transfer would result in the transferee and any affiliated parties collectively holding more than 25% of the ownership in the Franchise Owner. If the transfer would cause the transferee to exceed this 25% threshold, then the franchisee must obtain advance written approval from Degree Wellness.
Even if a minority owner transfer is permitted without advance consent, the franchisee is still required to promptly notify Degree Wellness of the change in ownership or interests. Furthermore, the formal partnership, corporation, or other formation documents, along with all stock certificates, partnership units, or other evidence of ownership, must include a statement or legend that reflects these transfer restrictions. This ensures that all owners are aware of the limitations on transferring interests in the Degree Wellness franchise.
This policy balances the need for Degree Wellness to maintain control over the ownership of its franchises with the flexibility for minority owners to manage their investments. It's a fairly typical arrangement in franchising, where franchisors want to ensure that significant ownership changes are subject to their approval to protect the brand and the interests of the franchise system. Prospective franchisees should carefully consider these transfer restrictions and ensure they understand the implications for minority owners before investing in a Degree Wellness franchise.