Can a Principal Owner's Interest in a Degree Wellness franchise be given as security for any obligation?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
You and each Principal Owner also represent, warrant, and agree that no Principal Owner's Interest has been given as security for any obligation (i.e., no one has a lien on or security interest in a Principal Owner's Interest), and that no change will be made in the ownership of an Interest other than as expressly permitted by this Agreement or
as we may otherwise approve in writing. You and each Principal Owner agree to furnish us with such evidence as we may request from time to time to assure ourselves that the Interests of Franchise Owner and each of your Principal Owners remain as permitted by this Agreement, including a list of all persons or entities owning any Interest, as defined above.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, a Principal Owner's Interest in a Degree Wellness franchise cannot be given as security for any obligation. The FDD states that the franchisee and each Principal Owner represent, warrant, and agree that no Principal Owner's Interest has been given as security for any obligation, meaning no one has a lien on or security interest in a Principal Owner's Interest.
This restriction means that Principal Owners cannot use their ownership stake in the Degree Wellness franchise as collateral for loans or other financial obligations. This is a protective measure by Degree Wellness to ensure that the ownership of the franchise remains stable and unencumbered, preventing potential complications that could arise if a Principal Owner defaults on a secured obligation.
This requirement is intended to maintain the integrity and stability of the Degree Wellness franchise system by preventing outside parties from gaining control or influence over the franchise through security interests. Degree Wellness also requires that no changes be made in the ownership of an Interest other than as expressly permitted by the Franchise Agreement or as Degree Wellness may otherwise approve in writing. Degree Wellness may request evidence to ensure that the Interests of Franchise Owner and each of your Principal Owners remain as permitted by the Franchise Agreement, including a list of all persons or entities owning any Interest.