What are the restrictions on a Degree Wellness franchisee's ability to operate a competing business after the termination of the franchise agreement, considering their obligations under the agreement (Item 9)?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
nagement Company to enforce any such agreements for its or Degree Wellness's benefit. Licensed Provider's duties and obligations with respect to the Confidential Information shall survive the termination or expiration of this Agreement.
- 10.3 Non-Competition Agreement and Other Restrictive Covenants.
- (a) Non-Competition. During the Agreement Term, Licensed Provider will not, directly or indirectly, perform services for, or have any direct or indirect interest as an owner, investor, partner, director, officer, employee, manager, consultant, representative, or agent in, any business that offers products or services the same as or similar to those offered or sold at the Studio. Licensed Provider's duties and obligations under this Section 10.3(a) shall survive for two (2) years following any termination or expiration of this Agreement; provided, however, that following such termination or expiration of this Agreement, this covenant shall only apply with respect to a competitive business that has a place of business located within a five (5) mile radius of the location of the Premises.
- (b) Non-Disparagement. Licensed Provider agrees that during the Agreement Term and thereafter, Licensed Provider will not, directly or indirectly, make any negative or critical statements to any third parties, either verbally or in any other form or media, about (a) Management Company, the Studio Management Business, Degree Wellness or any of its franchisees, or any of their respective products, services, businesses or business practices, or (b) the actions, operations or character of any of Management Company's or Degree Wellness's respective owners, officers, directors, employees, consultants or agents.
- (c) Non-Solicitation. Licensed Provider agrees that during the Agreement Term, and thereafter for a period of two (2) years following any termination or expiration of this Agreement, Licensed Provider will not, directly or indirectly, (a) solicit for health care or related services and products with any person who was a patient of the Studio within the two year period prior to such
termination or expiration; or (b) interfere with Management Company's or Degree Wellness's relationship with any of its franchisees, vendors, suppliers or referral sources.
- 10.4 Licensed Provider further agrees that it will cause Licensed Provider's employees to enter into and deliver to Management Company a "Restrictive Covenant Agreement" in such form as Management Company may prescribe, either concurrently with the execution of this Agreement or at such later date as determined by Management Company.
- 10.5. Licensed Provider acknowledges and agrees that a breach of any provision of this Section 10 would cause immediate and irreparable harm to Management Company and Degree Wellness. Therefore, Licensed Provider acknowledges and agrees that the foregoing restraints are fair and reasonable, are required for the protection of Management Company's and Degree Wellness's legitimate business interests, and do not impose any undue hardship on Licensed Provider. Degree Wellness shall be deemed to be a third party beneficiary of all of the covenants contained in this Section 10.
11. Indemnification.
- 11.1 Licensed Provider agrees to defend, indemnify and hold harmless Management Company, Degree Wellness and their respective owners, directors, officers, employees, agents, successors, and assigns (each a "Management Indemnified Party"), from and against any and all claims, lawsuits, demands, actions, causes of action or other events, and for all costs and expenses incurred by the Management Indemnified Party in connection therewith, including without limitation actual and consequential damages, reasonable attorneys', accountants', and/or expert witness fees, cost of investigation and proof of facts court costs, other litigation expenses, and travel and living expenses, to the extent caused by, relating to or otherwise arising out of (1) the effects, outcomes and consequences of Licensed Provider's acts and omissions and the acts and omissions of Licensed Provider's employees, representatives and agents in connection with or relating to the provision of the Licensed Provider Services or the operation of the Studio, (2) any agreements, representations, or warranties Licensed Provider makes to third parties that are not expressly authorized under this Agreement, (3) any damages to any person or property directly or indirectly arising out of the performance of the Licensed Provider Services or the operation of the Studio, whether or not caused by Licensed Provider's negligent or willful action or failure to act or acts or omissions deemed to be professional malpractice, and/or (4) Licensed Provider's breach of any provision of this Agreement. Degree Wellness shall be deemed to be a third party beneficiary of all of the covenants contained in this Section 11.1.
- 11.2 The indemnification obligations described in this Section 11 will continue in full force and effect after, and notwithstanding, the expiration, renewal or termination of this Agreement.
**12.
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, franchisees face several restrictions regarding competition both during and after the franchise agreement term. During the term, neither the franchisee, any principal owner, nor any member of their immediate family can directly or indirectly be involved with any business offering similar products or services to Degree Wellness Studio franchises. An exception exists for owning one percent or less of a publicly traded company.
After the termination or expiration of the franchise agreement, a Degree Wellness franchisee is still subject to certain non-compete obligations. Specifically, for two years post-termination, the franchisee cannot perform services for or have any interest in a competitive business located within a five-mile radius of the former Degree Wellness location. This restriction applies to the franchisee, principal owners, and their immediate families.
In addition to non-compete restrictions, franchisees are also prohibited from disparaging Degree Wellness or soliciting its clients, franchisees, vendors, suppliers, or referral sources for two years following termination. These provisions aim to protect Degree Wellness's brand reputation and business relationships even after a franchise agreement ends. Furthermore, the franchisee must cease using any confidential information and return all copies of the operations manual and confidential materials upon termination or expiration of the agreement.