How is the Protected Territory for a Degree Wellness franchise determined?
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 franchise agreement grants the franchisee the right to operate their franchise only at the designated premises. The document specifies that if the franchisee is in full compliance with the agreement, Degree Wellness will not operate or grant another franchise for a studio physically located within the territory described in Exhibit 1, which is referred to as the "Protected Territory".
The Protected Territory is mutually designated by both Degree Wellness and the franchisee upon or after the signing of the agreement. Exhibit 1 is then automatically updated to reflect this designation or any mutually agreed-upon changes to the Protected Territory. This implies that the initial territory is subject to negotiation and agreement between both parties, offering some flexibility in defining the area.
However, Degree Wellness retains significant rights outside the Protected Territory. These rights include operating or franchising studios outside the Protected Territory, operating other healthcare-related businesses under different trademarks, and selling products bearing their proprietary marks through various channels, including the internet, both within and outside the Protected Territory. They also retain the right to be acquired by a business that provides similar products and services, even if that business operates competitive businesses in the franchisee's Protected Territory. This means that while the franchisee has a protected territory for Degree Wellness studios, Degree Wellness can still engage in other business activities that may compete indirectly with the franchise.
Prospective franchisees should carefully review Exhibit 1 and negotiate the terms of their Protected Territory to ensure it meets their business goals. They should also be aware of the rights retained by Degree Wellness, which could potentially impact their business. Understanding these terms is crucial for assessing the potential risks and opportunities associated with a Degree Wellness franchise.