Can Degree Wellness transfer or assign the Degree Wellness Development Agreement without the developer's consent?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Development Agreement | Summary | |
|---|---|---|---|
| during the Development Period (including any monetary default) and you fail to cure such default within 30 days of receiving notice. | |||
| h. | "Cause" defined – non-curable defaults | Section 6.2 | We may terminate the Development Agreement if you cease to actively engage in development activities in the Site Selection Area or otherwise abandon your development business for three consecutive months, or any shorter period that indicates an intent by you to discontinue development of the Studios within the Site Selection Area; you become insolvent or are adjudicated bankrupt, or if any action is taken by you, or by others against the you, under any insolvency, bankruptcy or reorganization act, or if you make an assignment for the benefit or creditors or a receiver is appointed by you; and any Franchise Agreement that is entered into in order to fulfill your development obligations under the Development Agreement is terminated or subject to termination by us, pursuant to the terms of that Franchise Agreement. |
| i. | Developer's obligations on termination/ nonrenewal | Not Applicable | Not Applicable |
| j. | Assignment of contract by franchisor | Section 8 | We have the right to transfer or assign the Development Agreement and all or any part of our rights, duties or obligations to any person or legal entity without your consent. |
| k. | "Transfer" by developer – defined | Section 8 | Any transfer in you (if you are an entity) or your rights/obligations under the Development Agreement. |
| l. | Franchisor's approval of transfer by developer | Section 8 | You may not transfer any rights or obligations under the Development Agreement without our prior written consent. |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 49–59)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, Degree Wellness has the right to transfer or assign the Development Agreement without the developer's consent. Specifically, Degree Wellness can transfer the agreement, including all or any part of its rights, duties, or obligations, to any person or legal entity without needing the developer's approval.
This provision in the Development Agreement is important for prospective Degree Wellness developers to understand. It means that Degree Wellness retains significant flexibility in managing its franchise network and business operations. For example, Degree Wellness could sell its rights under the Development Agreement to another company, potentially changing the nature of the developer's relationship and obligations.
Conversely, the FDD states that the developer cannot transfer any rights or obligations under the Development Agreement without Degree Wellness's prior written consent. This creates a situation where Degree Wellness has the freedom to assign the agreement, but the developer does not, highlighting a power imbalance in the contractual relationship. Franchisees should carefully consider this asymmetry and its potential implications for their investment and business operations.
It is common in franchising for franchisors to retain the right to transfer agreements, as it allows them to adapt to changing business conditions and strategic priorities. However, franchisees should be aware of the conditions under which such transfers can occur and what protections they have in such events. Prospective Degree Wellness developers should seek legal counsel to fully understand the implications of this clause and negotiate for additional protections if possible.