What are the restrictions on a Degree Wellness franchisee's ability to use alternative suppliers, considering the requirements in Item 8 and the obligations in Item 9?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
erials only from distributors and other suppliers we have approved.
We may approve a single distributor or other supplier (collectively, "supplier") for any product or service, and may approve a supplier only as to certain products or services. We may concentrate purchases with one or more suppliers to obtain lower prices or the best advertising support or services for any group of Studios franchised or operated by us. Our approval of a supplier may be conditioned on requirements relating to the frequency of delivery, concentration of purchases, standards of service (including prompt attention to complaints), and other similar criteria, and may be temporary, pending our continued evaluation of the supplier.
You are required to use our designated supplier for site selection assistance and construction project management. You must acquire a site for your Studio that meets our site selection criteria and that we approve. If you occupy the Studio according to a commercial lease, the lease must contain terms that we specify.
If you would like to purchase or lease any items from any unapproved supplier, then you must submit to us a written request for approval of the proposed supplier or the proposed supplier may submit its own request. We may inspect the proposed supplier's facilities, and require that product samples from the proposed supplier be delivered for testing either directly to us or any independent certified laboratory that we designate. We also may require you (or the proposed supplier requesting the evaluation) to pay us an evaluation fee (not to exceed the actual cost of the inspection and the actual cost of the test (see Item 6) to make the evaluation. We will approve or disapprove your proposed supplier within 60 days of receiving all of the information that we require for the evaluation. We reserve the right to periodically re-inspect the facilities and products or services of any approved supplier, and revoke our approval if the supplier does not continue to meet any of our criteria. Our criteria for approving suppliers are not currently available to franchisees for review.
Degree Wellness and Our Affiliates as Approved Suppliers
If you, or one of your owners, cannot legally provide services to your Franchised Business then you must contract with our designated supplier to provide medical director services.
We are currently not an approved supplier for any other product, service, or equipment. We reserve the right to designate us and/or our affiliates as approved suppliers, or the exclusive
supplier(s), from whom you may purchase or lease certain other categories of products, services, and equipment.
Except for DW Financial Services, LLC, no franchisor officer owns any interest in any supplier.
Our Involvement with Suppliers
We and our affiliates and designees reserve the right to receive revenue or other material consideration from suppliers in consideration for other goods or services that we require or advise you to obtain from approved suppliers.
We negotiate price terms and other purchase arrangements with suppliers for you for some items that we require or suggest you to lease or purchase in developing and operating your Degree Wellness franchise, including clothing, marketing materials, services, and equipment. There currently are no purchasing and distribution cooperatives.
Medical Purchases
The corporate practice of medicine doctrine restricts layperson-franchisees from determining the medical equipment and supplies to be used in the operation of the medical services provided in the Studio.
Effects of Compliance and Noncompliance
We do not provide any other benefits to you because of your use of designated or approved services and products, or suppliers.
Revenue We Derive From Franchisee Purchases
We do not currently derive revenue from Franchisee purchases but we reserve the right to in the future. As such for the year ending December 31, 2025, we received $0 from Franchisee purchases, which is 0% of our total revenue of $0. For the year ending December 31, 2025, our affiliate DW Financial received $0 from Franchisee purchases, which is 0% of its total revenue of $0.
Item 9
FRANCHISEE'S OBLIGATIONS
This table lists your principal obligations under the franchise and other agreements. It will help you find more detailed information about your obligations in these agreements and in other items of this disclosure document.
| Obligation | Section in Agreement | Disclosure Document Item |
|---|---|---|
| a. Site selection and acquisition/lease | Section 3.1 of FA; Attachment A of the Development Agreement | Items 7, 8, and 11 |
| b. Pre-opening purchases/leases | Sections 3.1, 3.2, 3.3, 3.4, 3.5 and 3.6 of FA | Items 7, 8, and 11 |
| Obligation | Section in Agreement | Disclosure Document Item |
|---|---|---|
| c. Site development and other pre opening requirements | Sections 3.2, 3.3, 3.4 and 3.6 of FA; Section 1 and Attachment A of the Development Agreement | Items 7, 8, and 11 |
| d. Initial and ongoing training | Sections 3.6, 4, 5.1 and 10.7 of FA | Items 5, 6, 7, 11 and 14 |
| e. Opening | Sections 3.3 and 3.6 of FA, Exhibit 1 of FA; Attachment A of the Development | Items 7 and 11 |
| f. Fees | Agreement Sections 2.4, 3.4, 4.2, 5.1, 5.2, 6, 10.1, 10.3, 10.8, 11.1, 11.2, 12, 13.2, 14.5, and 15 of FA, Exhibits 4 of FA; Section 2 of the Development Agreement | Items 5, 6, 7, 8, 11, 13 and 14 |
| g. Compliance with standards and policies/Operating Manual | Sections 2.4, 3.2, 3.3, 3.4, 3.5, 3.6, 5.2, 5.3, 6.4, 7.1, 10, 11.4, 13.1 and 19 of FA | Items 8, 11, and 12 |
| h. Trademarks and proprietary | Sections 7, | Items |
| information | 9 and 16.2 of FA | 13 and 14 |
| i. Restrictions on products/services | Section 10.2 of FA | Item 8 and 16 |
| offered | ||
| j. Warranty and customer service | Section 10.7 of FA | Not Applicable |
| requirements | ||
| k. Territorial development and sales quotas | Section 2.3 and 3.1 of FA; Attachment A of the Development Agreement | Item 12 |
| l. On-going product/service | Sections 3.4, 5.1, 6.4, 6.5, 10.2, 10.3, | Items |
| purchases | 10.8, 10.9, 11.2, and 11.4 of FA | 8 and 11 |
| m. |
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, franchisees face several restrictions regarding suppliers. Degree Wellness may approve a single supplier for any product or service and may concentrate purchases with specific suppliers to get better pricing or advertising support. Approval of a supplier can depend on factors like delivery frequency, service standards, and complaint handling, and may be temporary while Degree Wellness evaluates the supplier. Franchisees are required to use Degree Wellness's designated supplier for site selection assistance and construction project management. The site must meet Degree Wellness's criteria, and any commercial lease must include terms specified by Degree Wellness.
If a franchisee wants to use an unapproved supplier, they must submit a written request for approval. Degree Wellness may inspect the supplier's facilities and require product samples for testing, potentially at an independent certified laboratory. The franchisee, or the proposed supplier, might have to pay an evaluation fee to cover the inspection and testing costs. Degree Wellness will then approve or disapprove the supplier within 60 days of receiving all required information. Degree Wellness can re-inspect approved suppliers and revoke approval if they no longer meet the criteria. However, the specific criteria for approving suppliers are not available for franchisees to review.
Degree Wellness estimates that about 50% of a franchisee's total purchases and expenses in setting up and running the franchise will be from approved suppliers. Franchisees must follow Degree Wellness's standards and specifications for almost all goods and services. The Operations Manual details these specifications, standards, and guidelines, which Degree Wellness can change through amendments or supplements. Franchisees must buy products for sale in the quantities Degree Wellness designates, use the prescribed formats and containers, and purchase all materials only from approved distributors and suppliers. If a franchisee cannot legally provide services, they must contract with Degree Wellness's designated supplier for medical director services.
Degree Wellness reserves the right to designate itself or its affiliates as approved or exclusive suppliers for certain products, services, and equipment. Degree Wellness and its affiliates can receive revenue from suppliers for goods or services that Degree Wellness requires or advises franchisees to obtain from approved suppliers. Degree Wellness negotiates price terms with suppliers for items like clothing, marketing materials, services, and equipment. The corporate practice of medicine doctrine restricts layperson-franchisees from determining the medical equipment and supplies used in the medical services provided at the studio.