Does the non-disparagement clause in the Degree Wellness agreement apply after the Agreement Term?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) Non-Disparagement. Licensed Provider agrees that during the Agreement Term and thereafter, Licensed Provider will not, directly or indirectly, make any negative or critical statements to any third parties, either verbally or in any other form or media, about (a) Management Company, the Studio Management Business, Degree Wellness or any of its franchisees, or any of their respective products, services, businesses or business practices, or (b) the actions, operations or character of any of Management Company's or Degree Wellness's respective owners, officers, directors, employees, consultants or agents.
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 non-disparagement clause extends beyond the Agreement Term. The agreement specifies that the Licensed Provider (franchisee) is prohibited from making negative or critical statements about Degree Wellness, its franchisees, or its business practices, even after the franchise agreement has expired or been terminated. This restriction applies to statements made to any third party, whether verbally or through any other form of media.
This means that even after a franchisee leaves the Degree Wellness system, they are still legally bound to refrain from making disparaging remarks about the brand. This is a common practice in franchising, designed to protect the franchisor's reputation and brand image. The clause covers not only Degree Wellness itself but also its owners, officers, directors, employees, consultants, and agents.
For a prospective franchisee, this clause has significant implications. It means that even if they have a negative experience with Degree Wellness, they must be careful about what they say publicly. Violating this clause could lead to legal action by Degree Wellness. Franchisees should carefully consider this restriction and its potential impact on their freedom of speech before entering into an agreement. It is advisable to seek legal counsel to fully understand the scope and implications of the non-disparagement clause.
While non-disparagement clauses are common, their enforceability can vary depending on the specific language of the agreement and the jurisdiction. Some courts may view overly broad or restrictive clauses as unenforceable. Therefore, it is crucial for franchisees to understand their rights and obligations under the agreement and to seek legal advice if they have any concerns about the non-disparagement clause.