How are the oversight responsibilities of an unlicensed Degree Wellness franchisee distinct from the services provided by the professional corporation?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
As further described below, to operate a Studio Management Business, you must enter into a Franchise Agreement with us and a Management Agreement with a "PC" that will own and operate the Studio. A "PC" will be one or more licensed individuals, or a professional corporation or similar entity, such as a professional limited liability company, that is duly authorized to provide health care services under local and state laws. In such an arrangement:
i) You, as franchisee, will construct or build-out the Studio for use by the PC.
ii) The Studio business will be operated by the PC using the Degree Wellness name and Marks.
iii) In addition to signing the Franchise Agreement with us, before you begin operating the Studio Management Business, you must enter into a management agreement ("Management Agreement") with the PC. If permitted by state and local law, the PC may be the same entity as your franchisee entity or have the same owners. Under the Management Agreement, you will provide the PC with management and administrative services and support consistent with the System to support the PC's health care business and its delivery of health care services and related services and products to patients at a Studio, consistent with all applicable laws and regulations. Our Franchise Disclosure Document contains a general form of Management Agreement as an exhibit that can serve as a starting point for satisfying this requirement, but the actual Management Agreement to be used must be approved by us, in our discretion, and must satisfy all requirements and limitations of applicable laws, rules and regulations of the state in which the Studio will be located.
iv) You must obtain our written approval of the final Management Agreement prior to signing it with the PC. We may provide you with assistance in preparing the Management Agreement, but you are responsible for determining whether such agreement is in
compliance with all applicable laws, rules and regulations of the state in which the Studio is located.
You must have a Management Agreement in effect with a PC at all times during the operation of the Franchised Business and the Initial Term of this Agreement.
v) We must approve the PC and its owners, but you are responsible for ensuring that the PC is in compliance with all applicable laws, rules and regulations of the state in which the Studio is located.
vi) The PC will employ and control the personnel who will provide the health related services required to be delivered at and through the Studio.
Source: Item 15 — Obligation to Participate in the Actual Operation of the Franchise Business (FDD pages 48–49)
What This Means (2025 FDD)
According to the 2025 Degree Wellness Franchise Disclosure Document, a franchisee may operate a Studio Management Business without a healthcare license by partnering with a Professional Corporation (PC). The franchisee's responsibilities primarily revolve around managing the business aspects of the studio, while the PC focuses on providing healthcare services.
The franchisee, as the Management Company, is responsible for securing the location, managing the lease, acquiring and maintaining equipment and furnishings, developing a business plan, scheduling appointments, handling patient inquiries, determining fees for supplies and devices, assisting with billing and collections, arranging participation in discount medical plans, and maintaining patient records under the direction of the Licensed Provider. They also handle office management tasks such as purchasing supplies, managing computer systems, providing secretarial services, and procuring uniforms. Furthermore, the franchisee is in charge of hiring, training, scheduling, supervising, and managing administrative and office staff, ensuring adequate staffing levels for both the management business and the studio. They also administer payroll and insurance for the Licensed Provider and their employees.
In contrast, the Professional Corporation (PC) is responsible for employing and controlling the personnel who provide the health-related services at the studio. The PC must be comprised of licensed individuals or a professional corporation authorized to provide healthcare services under local and state laws. The PC operates the studio business using the Degree Wellness name and marks and is responsible for the actual delivery of healthcare services. The franchisee must have a management agreement in effect with a PC at all times during the operation of the franchised business. Degree Wellness must approve the PC and its owners, but the franchisee is responsible for ensuring the PC's compliance with all applicable laws and regulations.
This arrangement allows individuals without healthcare licenses to invest in and manage a Degree Wellness studio by partnering with qualified healthcare professionals. However, it's crucial for the franchisee to understand their responsibilities in managing the business operations and ensuring compliance with the franchise agreement, while also respecting the PC's autonomy in providing healthcare services. The franchisee should seek legal counsel to ensure the management agreement complies with all applicable laws and regulations in their state.