What is the 'Protected Territory' for a Degree Wellness franchise, and where is it described?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
You acknowledge that the Franchise granted by this Agreement gives you the right to operate your Franchise only at the Premises.
Provided you are in full compliance with this Agreement, neither we nor our affiliates will operate or grant a franchise for the operation of another Studio franchise physically located within the territory described in Exhibit 1 (the "Protected Territory").
You and we will mutually designate your Protected Territory upon or after the signing of this Agreement and Exhibit 1 shall be deemed to be automatically updated and revised to reflect such designation or any mutually agreed upon changes to your Protected Territory.
Except as otherwise provided in this Paragraph 2.3, we retain all rights with respect to Studio franchises, the Marks and the System, including (by way of example only and not as a limitation): (a) the right to operate or grant others the right to operate Studio franchises physically located outside the Protected Territory on terms and conditions we deem appropriate; (b) the right to operate or offer other healthcare-related companies or franchises or enter into other lines of business offering similar or dissimilar products or services under trademarks or service marks other than the Marks, both within or outside of the Protected Territory and to use other channels of distribution (for example, the internet, email, social media, telemarketing, or other direct marketing) in connection with such system(s) and/or location(s); (c) the right to sell or distribute, at retail or wholesale, directly or indirectly, or via the internet or any other means, or license others to sell or distribute, via any means (including the internet and other channels of distribution) any products that bear any proprietary marks, including the Marks, whether within or outside your Protected
Territory; (d) the right to own, acquire, establish, and/or operate, and license others to establish and operate, businesses different from a Franchised Business but operated under the Marks within or outside your Protected Territory, and to use other channels of distribution (for example, the internet, email, social media, telemarketing, or other direct marketing) in connection with such system(s) and/or location(s); and (e) the right to be acquired (whether though acquisition of assets, or equity interests or otherwise, regardless of the form of transaction) by a business or entity providing products and services similar to those provided by Franchised Businesses even if that business or entity operates, franchises, or licenses competitive businesses in your Protected Territory.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, the 'Protected Territory' is described in Section 2.3 and Exhibit 1 of the franchise agreement. The document states that the franchise grants the franchisee the right to operate their Degree Wellness studio only at the specified Premises. Provided the franchisee is in full compliance with the agreement, Degree Wellness and its affiliates will not operate or grant a franchise for another studio physically located within the territory outlined in Exhibit 1, which defines the 'Protected Territory'.
The Protected Territory is mutually designated by Degree Wellness and the franchisee upon or after signing the agreement, and Exhibit 1 is then updated to reflect this designation or any agreed-upon changes. This means the specific boundaries of the territory are not predetermined in the FDD but are negotiated as part of the franchising process. This offers some flexibility but also introduces a degree of uncertainty for the prospective franchisee.
However, Degree Wellness retains several rights, even within the Protected Territory. These include the rights to: operate or franchise studios outside the Protected Territory; operate other healthcare-related businesses under different trademarks; sell products bearing the Degree Wellness marks through any channel, including the internet; operate different businesses under the Degree Wellness marks; and be acquired by a business providing similar services, even if that business operates competitive businesses in the Protected Territory. These retained rights significantly limit the exclusivity of the Protected Territory.
For a prospective franchisee, it is crucial to carefully review Exhibit 1 and negotiate the terms of the Protected Territory to ensure it meets their business needs and expectations. They should also be aware of the exceptions and retained rights that Degree Wellness holds, as these could impact the franchisee's ability to compete within their designated area. Understanding these limitations is essential for making an informed investment decision.