What are the obligations of a Degree Wellness franchisee regarding the use of approved suppliers (Item 8), considering their obligations related to quality control and standards (Item 9)?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
requested our approval in accordance in our Operations Manuals.
We estimate that your total expenditures in leasing or purchasing real estate, equipment, fixtures, products, marketing materials, services, and computer hardware and software from our approved suppliers will represent approximately 50% of your total purchases and expenses in connection with establishing and operating your Degree Wellness franchise. Virtually all of the goods and services that you must lease or purchase in establishing and operating your franchise must comply with our standards and specifications.
Issuance and Modification of our Specifications
Our Operations Manual sets forth our specifications, standards, and guidelines for all real estate, goods, and services that you are required to obtain in establishing and operating your franchise, and additional guidelines and requirements for operating your franchise (including the optional programs). We will make available new or modified specifications, standards, and guidelines to you through periodic amendments or supplements to the Operations Manual or other written materials. See Item 11 for additional information about our Operations Manual.
We will make available written copies of our standards and specifications to you and approved and proposed suppliers, unless these standards and specifications contain our confidential information (see Item 14).
Approved Products, Distributors and Suppliers
We have developed standards and specifications for the leasehold improvements of your Studio, the equipment and materials used to perform services at your Studio, and products authorized for sale at your Studio. We have approved, and will continue to periodically approve, specifications and/or suppliers and distributors of the above items, services and products, which may include us or our affiliates, that meet our standards and requirements. These specifications include standards and requirements relating to product quality, prices, consistency, reliability, financial capability, labor relations and customer relations. You must (1) purchase products for sale by your Studio in the quantities we designate; (2) use those formats, formulae, and containers for products that we prescribe; and (3) purchase all products, services and other materials only from distributors and other suppliers we have approved.
We may approve a single distributor or other supplier (collectively, "supplier") for any product or service, and may approve a supplier only as to certain products or services. We may concentrate purchases with one or more suppliers to obtain lower prices or the best advertising support or services for any group of Studios franchised or operated by us. Our approval of a supplier may be conditioned on requirements relating to the frequency of delivery, concentration of purchases, standards of service (including prompt attention to complaints), and other similar criteria, and may be temporary, pending our continued evaluation of the supplier.
You are required to use our designated supplier for site selection assistance and construction project management. You must acquire a site for your Studio that meets our site selection criteria and that we approve. If you occupy the Studio according to a commercial lease, the lease must contain terms that we specify.
If you would like to purchase or lease any items from any unapproved supplier, then you must submit to us a written request for approval of the proposed supplier or the proposed supplier may submit its own request. We may inspect the proposed supplier's facilities, and require that product samples from the proposed supplier be delivered for testing either directly to us or any independent certified laboratory that we designate. We also may require you (or the proposed supplier requesting the evaluation) to pay us an evaluation fee (not to exceed the actual cost of the inspection and the actual cost of the test (see Item 6) to make the evaluation. We will approve or disapprove your proposed supplier within 60 days of receiving all of the information that we require for the evaluation. We reserve the right to periodically re-inspect the facilities and products or services of any approved supplier, and revoke our approval if the supplier does not continue to meet any of our criteria. Our criteria for approving suppliers are not currently available to franchisees for review.
Degree Wellness and Our Affiliates as Approved Suppliers
If you, or one of your owners, cannot legally provide services to your Franchised Business then you must contract with our designated supplier to provide medical director services.
We are currently not an approved supplier for any other product, service, or equipment. We reserve the right to designate us and/or our affiliates as approved suppliers, or the exclusive
supplier(s), from whom you may purchase or lease certain other categories of products, services, and equipment.
Except for DW Financial Services, LLC, no franchisor officer owns any interest in any supplier.
Our Involvement with Suppliers
We and our affiliates and designees reserve the right to receive revenue or other material consideration from suppliers in consideration for other goods or services that we require or advise you to obtain from approved suppliers.
We negotiate price terms and other purchase arrangements with suppliers for you for some items that we require or suggest you to lease or purchase in developing and operating your Degree Wellness franchise, including clothing, marketing materials, services, and equipment. There currently are no purchasing and distribution cooperatives.
Medical Purchases
The corporate practice of medicine doctrine restricts layperson-franchisees from determining the medical equipment and supplies to be used in the operation of the medical services provided in the Studio.
Effects of Compliance and Noncompliance
We do not provide any other benefits to you because of your use of designated or approved services and products, or suppliers.
Revenue We Derive From Franchisee Purchases
We do not currently derive revenue from Franchisee purchases but we reserve the right to in the future. As such for the year ending December 31, 2025, we received $0 from Franchisee purchases, which is 0% of our total revenue of $0. For the year ending December 31, 2025, our affiliate DW Financial received $0 from Franchisee purchases, which is 0% of its total revenue of $0.
Item 9
FRANCHISEE'S OBLIGATIONS
This table lists your principal obligations under the franchise and other agreements. It will help you find more detailed information about your obligations in these agreements and in other items of this disclosure document.
| Obligation | Section in Agreement | Disclosure Document Item |
|---|---|---|
| a. Site selection and acquisition/lease | Section 3.1 of FA; Attachment A of the Development Agreement | Items 7, 8, and 11 |
| b. Pre-opening purchases/leases | Sections 3.1, 3.2, 3.3, 3.4, 3.5 and 3.6 of FA | Items 7, 8, and 11 |
| Obligation | Section in Agreement | Disclosure Document Item |
|---|---|---|
| c. Site development and other pre opening requirements | Sections 3.2, 3.3, 3.4 and 3.6 of FA; Section 1 and Attachment A of the Development Agreement | Items 7, 8, and 11 |
| d. Initial and ongoing training | Sections 3.6, 4, 5.1 and 10.7 of FA | Items 5, 6, 7, 11 and 14 |
| e. Opening | Sections 3.3 and 3.6 of FA, Exhibit 1 of FA; Attachment A of the Development | Items 7 and 11 |
| f. Fees | Agreement Sections 2.4, 3.4, 4.2, 5.1, 5.2, 6, 10.1, 10.3, 10.8, 11.1, 11.2, 12, 13.2, 14.5, and 15 of FA, Exhibits 4 of FA; Section 2 of the Development Agreement | Items 5, 6, 7, 8, 11, 13 and 14 |
| g. Compliance with standards and policies/Operating Manual | Sections 2.4, 3.2, 3.3, 3.4, 3.5, 3.6, 5.2, 5.3, 6.4, 7.1, 10, 11.4, 13.1 and 19 of FA | Items 8, 11, and 12 |
| h. Trademarks and proprietary | Sections 7, | Items |
| information | 9 and 16.2 of FA | 13 and 14 |
| i. Restrictions on products/services | Section 10.2 of FA | Item 8 and 16 |
| offered | ||
| j. Warranty and customer service | Section 10.7 of FA | Not Applicable |
| requirements | ||
| k. Territorial development and sales quotas | Section 2.3 and 3.1 of FA; Attachment A of the Development Agreement | Item 12 |
| l. On-going product/service | Sections 3.4, 5.1, 6.4, 6.5, 10.2, 10.3, | Items |
| purchases | 10.8, 10.9, 11.2, and 11.4 of FA | 8 and 11 |
| m. Maintenance, appearance, and | Sections 10.1 and 10.5 of FA | Items |
| remodeling requirements | 8, and 11 | |
| n. Insurance | Section 10.8 of FA | Items 6, 7, and 8 |
| o. Advertising | Sections 6.3 and 11 of FA | Items 6, 7, and 11 |
| p. Indemnification | Section 8.3 of FA | Items 6 and 13 |
| q. Owner's participation/ | Sections 4.1 and 10.7 of FA, Exhibit | Items |
| management/staffing | 3 of FA | 11 and 16 |
| r. |
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, franchisees are obligated to adhere to strict guidelines regarding approved suppliers to maintain quality control and brand standards. Degree Wellness estimates that approximately 50% of a franchisee's total expenditures in establishing and operating their franchise will be spent on approved suppliers for items such as real estate, equipment, fixtures, products, marketing materials, services, and computer hardware and software. Franchisees must purchase products in designated quantities, use prescribed formats and containers, and acquire all materials exclusively from approved distributors and suppliers. These suppliers must meet Degree Wellness's standards for product quality, prices, consistency, reliability, financial capability, labor relations, and customer relations.
Degree Wellness retains the authority to approve single suppliers for specific products or services and may concentrate purchases with select suppliers to secure better pricing or support. Approvals can be conditional, based on factors like delivery frequency and service standards, and may be temporary pending ongoing evaluation. Franchisees are required to use Degree Wellness's designated supplier for site selection assistance and construction project management, ensuring that the site meets the franchisor's criteria and that lease terms align with their specifications.
If a franchisee wishes to use an unapproved supplier, they must submit a written request for approval. Degree Wellness may then inspect the supplier's facilities and require product samples for testing, potentially at the franchisee's expense, with an evaluation fee not exceeding the inspection and testing costs. The franchisor will approve or disapprove the supplier within 60 days of receiving all required information and reserves the right to re-inspect approved suppliers and revoke approval if standards are not maintained. Degree Wellness also reserves the right to designate itself or its affiliates as approved or exclusive suppliers for certain products, services, and equipment.
Franchisees must maintain the condition and appearance of the franchise, its equipment, furniture, furnishings, and signs, and the premises in accordance with Degree Wellness's standards. This includes regular cleaning, repainting, redecorating, and necessary repairs or replacements to uphold the brand's image of high-quality services and cleanliness. Franchisees cannot make material alterations to the premises without prior written approval from Degree Wellness, and they must promptly replace or add new equipment as specified by the franchisor to meet evolving standards or new service methods. Franchisees are also obligated to engage in remodeling, expansion, redecorating, or refurnishing of the premises to reflect changes in Degree Wellness operations, provided certain conditions are met, such as having at least two years remaining on the franchise term and the changes being implemented in a significant portion of existing Degree Wellness studios.