What opportunity must the landlord offer Degree Wellness in the event of a franchisee default?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
-
- In the event of Franchisee's default under the terms of the Lease, Landlord shall promptly deliver notice of such default to Franchisor and shall offer Franchisor the opportunity to cure the default and to assume the Lease in Franchisor's name.
If Franchisor elects to cure the default and assume the Lease, Franchisor, within 10 days of its receipt of notice from Landlord, shall notify Landlord of its intent to cure such default and to assume the Lease.
If Franchisor elects to cure the default, it shall cure the default within 30 days of such election or, if the default cannot be reasonably cured within such 30-day period, then Franchisor will commence and proceed to cure the default within such time as is reasonably necessary to cure the default.
If Franchisor elects to assume the Lease, Landlord agrees to recognize Franchisor as the tenant under the Lease and Franchisee will no longer have any rights there under.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, if a franchisee defaults on their lease, the landlord must promptly notify Degree Wellness of the default. The landlord must then offer Degree Wellness the opportunity to cure the default and assume the lease in Degree Wellness's name. This provision is designed to protect Degree Wellness's brand and ensure continuity of operations.
If Degree Wellness chooses to cure the default and assume the lease, it has 10 days from receiving the landlord's notice to inform the landlord of its intent. Degree Wellness then has 30 days to cure the default. If the default cannot be reasonably cured within 30 days, Degree Wellness must begin and diligently continue to cure the default within a reasonable timeframe.
If Degree Wellness elects to assume the lease, the landlord must recognize Degree Wellness as the new tenant, and the franchisee will no longer have any rights under the lease. This clause ensures that Degree Wellness has the option to maintain control over the location and continue operating the studio, even if the original franchisee fails to meet their lease obligations. This is a fairly common clause in franchise agreements, as it protects the franchisor's investment in the location and brand.