Are third parties bound by the arbitration agreement in the Degree Wellness FDD?

According to Degree Wellness's 2025 Franchise Disclosure Document, the arbitration agreement can limit third-party non-signatories, binding them to the agreement. This ensures that the arbitration clause remains effective even if third parties are involved in disputes related to the franchise agreement. This provision remains in effect even after the agreement expires or is terminated.

This clause is significant for prospective Degree Wellness franchisees because it broadens the scope of the arbitration agreement. It means that disputes involving parties other than just the franchisee and franchisor can still be subject to arbitration, potentially streamlining conflict resolution and avoiding costly litigation in court.

However, it is important to note that the FDD does not specify the exact circumstances under which third parties will be bound. Franchisees should seek clarification from Degree Wellness regarding which third parties are intended to be bound by the arbitration agreement and the specific situations in which this provision would apply. Understanding these details is crucial for assessing the full implications of the arbitration clause.

Furthermore, the FDD also states that any arbitration shall be conducted on an individual basis, not as a joint or class-wide action, and shall not be consolidated with other arbitration proceedings. This means that a Degree Wellness franchisee cannot participate in a class action against the franchisor, and each dispute must be handled separately.