When Degree Wellness receives a payment from a franchisee, how does Degree Wellness apply the payment?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
- 6.8 Application of Payments; No Set-Off.
When we receive a payment from you, we have the right in our sole discretion to apply it as we see fit to any past due indebtedness of yours due to us or our affiliates, whether for Continuing Franchise Fees, Fund contributions, purchases, interest, or for any other reason, regardless of how you may designate a particular payment should be applied.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, Degree Wellness has the right to apply payments from franchisees to any past due debts the franchisee owes to Degree Wellness or its affiliates. This includes debts for Continuing Franchise Fees, Fund contributions, purchases, or interest, regardless of how the franchisee intended the payment to be applied.
This policy gives Degree Wellness significant control over how franchisee payments are allocated. It allows Degree Wellness to prioritize the collection of overdue amounts, which could include fees, contributions, or even interest, before allocating funds to current obligations. This could impact a franchisee's ability to manage their finances, especially if they have disputes over certain charges or are experiencing cash flow difficulties.
For a prospective Degree Wellness franchisee, this means understanding that any payment made to Degree Wellness can be applied to outstanding debts at Degree Wellness's discretion. Franchisees cannot assume that their payments will automatically cover current fees or contributions if they have any past due amounts. It is crucial to maintain good financial standing with Degree Wellness to avoid having payments reallocated in a way that could negatively affect their business operations. Franchisees should also maintain detailed records of all payments and outstanding balances to ensure transparency and accuracy in their financial dealings with Degree Wellness.
This practice is not uncommon in franchising, as franchisors often seek to protect their revenue streams and ensure compliance with financial obligations. However, it underscores the importance of clear communication and diligent record-keeping between Degree Wellness and its franchisees to prevent misunderstandings and financial disputes.