Under what conditions can Degree Wellness terminate the Development Agreement without allowing the developer an opportunity to cure the default?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
- 6.2 Franchisor will have the right, at its option, to terminate this Agreement and all rights granted to Developer hereunder, without affording Developer any opportunity to cure such default, effective upon written notice to Developer, upon the occurrence of any of the following events: (i) if Developer ceases to actively engage in development activities in the Site Selection Area or otherwise abandons its development business for three consecutive months, or any shorter period that indicates an objective intent by Developer to discontinue development of the Studios within the Site Selection Area; (ii) if Developer becomes insolvent or is adjudicated bankrupt, or if any action is taken by Developer, or by others against the Developer, under any insolvency, bankruptcy or reorganization act, or if Developer makes an assignment for the benefit of creditors or a receiver is appointed by the Developer; (iii) if Developer fails to meet its development obligations under the Development Schedule for any single Development Period, and fails to cure such default within 30 days of receiving notice thereof; and (iv) if any Franchise Agreement that is entered into in order to fulfill Developer's development obligations under this Agreement is terminated or subject to termination by Franchisor, pursuant to the terms of that Franchise Agreement.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, Degree Wellness has the option to terminate the Development Agreement immediately, without providing an opportunity to cure the default, under specific circumstances. These circumstances include if the developer ceases active engagement in development activities within the Site Selection Area or abandons their development business for three consecutive months, or any shorter period that indicates an intent to discontinue development of Studios within the Site Selection Area.
Additionally, Degree Wellness can terminate the agreement without a cure period if the developer becomes insolvent, is adjudicated bankrupt, faces actions under insolvency, bankruptcy, or reorganization acts, makes an assignment for the benefit of creditors, or has a receiver appointed. Another cause for immediate termination is if the developer fails to meet their development obligations under the Development Schedule for any single Development Period, but only if they fail to cure such default within 30 days of receiving notice.
Finally, Degree Wellness can terminate the Development Agreement without allowing an opportunity to cure if any Franchise Agreement entered into to fulfill the developer's obligations is terminated or subject to termination by Degree Wellness, according to the terms of that Franchise Agreement. This means that a breach of the franchise agreement for a specific location can trigger the termination of the entire development agreement, impacting the developer's rights to open further locations.
These conditions are significant for potential Degree Wellness developers as they highlight the importance of maintaining consistent development activity, financial stability, and compliance with both the Development Agreement and individual Franchise Agreements. Failure to meet these requirements could result in the immediate termination of the Development Agreement and the loss of development rights.