What are the restrictions on a Degree Wellness franchisee's ability to sell or transfer their franchise, considering their obligations under the franchise agreement (Item 9)?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree that we would be unable to protect the Confidential Information against unauthorized use or disclosure, and would be unable to encourage a free exchange of ideas and information among Degree Wellness franchises, if franchise owners of Degree Wellness franchises were permitted to hold interests in any competitive businesses (as described below).
Therefore, during the Term of this Agreement, neither you, nor any Principal Owner, nor any member of your immediate family or of the immediate family of any Principal Owner, shall 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 Degree Wellness Studio franchises; provided, however, that the ownership of one percent (1%) or less of a publicly traded company will not be deemed to be prohibited by this Paragraph.
- b.
Non-Disparagement.
You agree that during the Term of this Agreement, and thereafter following any Transfer, termination or expiration of this Agreement, neither you, nor any Principal Owner, nor any member of your immediate family or of the immediate family of any Principal Owner, will directly or indirectly make any negative or critical statements to any third parties, either verbally or in any other form or media, about (a) us, the Franchise, any of our franchisees, or any of their respective products, services, businesses or business practices, or (b) the actions, operations or character of any of our or their respective owners, officers, directors, employees, consultants or agents.
- c.
Non-Solicitation.
You agree that during the Term of this Agreement, and thereafter for a period of two (2) years following any Transfer, termination or expiration of this Agreement, neither you, nor any Principal Owner, nor any member of your immediate family or of the immediate family of any Principal Owner, will directly or indirectly (a) solicit for wellness or related services or products with any person who was a member or client of the Franchise within the two year period prior to such Transfer, termination or expiration; or (b) interfere with our relationship with any of our franchisees, vendors, suppliers or referral sources.
- d.
General Managers to Sign Agreement.
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, franchisees face several restrictions regarding the sale or transfer of their franchise, particularly concerning confidential information and competitive activities. During the franchise term, franchisees, principal owners, and their immediate families are prohibited from having any interest in businesses offering similar products or services to Degree Wellness Studios. However, owning one percent or less of a publicly traded company is an exception to this rule.
The FDD emphasizes the protection of Degree Wellness's confidential information. Franchisees acknowledge that their relationship with Degree Wellness does not grant them any ownership interest in the confidential information, and they can only use it for operating the franchise during the agreement term. Franchisees must maintain absolute confidentiality during and after the franchise term, preventing unauthorized use or disclosure of this information. These obligations regarding confidential information survive any transfer, termination, or expiration of the agreement.
Additionally, franchisees agree not to make negative or critical statements about Degree Wellness, its franchisees, or their businesses, even after transferring, terminating, or upon expiration of the agreement. For two years following any transfer, termination, or expiration, franchisees are also restricted from soliciting wellness services or products from anyone who was a client of the franchise within the two years before the transfer, termination, or expiration. They are also prohibited from interfering with Degree Wellness's relationships with its franchisees, vendors, suppliers, or referral sources. These restrictions ensure that franchisees do not leverage their knowledge and experience gained from Degree Wellness to harm the franchise system after they leave.