What actions by a Dermani Medspa franchisee constitute a violation of Section 12 regarding transfers?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
12.3. Conditions for Approval of Transfer.
- 12.3.1. You must submit a written request to us for any proposed transfer under this Agreement. If you are in full compliance with this Agreement, including our policies and System Standards, then we will not unreasonably withhold our consent to a transfer that meets all of the requirements in this Section. For any proposed transfer, all of the following conditions must be met before or concurrently with the effective date of the transfer:
- (a) The transferee is approved by us and demonstrates to our satisfaction that he/she meets our then-current standards for new dermani MEDSPA® businesses, and possesses sufficient business experience, aptitude, and financial resources to operate the Franchised Business;
- (b) You have paid all Royalty Fees, System Marketing Fees, and other amounts owed to us and third party vendors (other than amounts payable to third party vendors that are the subject of a good faith dispute with such vendor), have submitted all required reports and statements, and are not in violation of this Agreement at the time of transfer;
- (c) (i) You have corrected any existing deficiencies of the Franchised Business of which we have notified you in writing or by electronic communications, and/or (ii) the transferee agrees to upgrade and refurbish the Franchised Business in accordance with our then current requirements and specifications for Franchised Businesses and Medspas within the time period we specify following the effective date of the transfer (we will advise the transferee before the effective date of the transfer of the specific actions that it must take and the time period within which such actions must be taken);
- (d) Neither the transferee nor its owners (if the transferee is an Entity) or affiliates have an ownership interest (direct or indirect) in or perform services for a Competitive Business;
- (e) All required personnel of the transferee satisfactorily complete our training program;
- (f) Your landlord allows you to transfer the lease or sublease the Premises to the transferee;
- (g) The transferor shall remain liable for all of the obligations to us in connection with the Franchised Business incurred prior to the effective date of the transfer and shall execute any and all instruments reasonably requested by us to evidence such liability;
- (h) The transferee (i) must sign our then current form of franchise agreement and related documents, any and all of the provisions of which may differ materially
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
According to Dermani Medspa's 2025 Franchise Disclosure Document, Section 12 outlines the conditions for transferring a franchise agreement. A Dermani Medspa franchisee would be in violation of Section 12 if they attempt to transfer their franchise without meeting specific requirements. These include failing to obtain Dermani Medspa's written approval for the transfer request. Dermani Medspa will not unreasonably withhold consent if the franchisee is in full compliance with the agreement, policies, and system standards.
Specifically, the franchisee must ensure that the proposed transferee meets Dermani Medspa's standards for new businesses, demonstrating sufficient business experience, aptitude, and financial resources. All outstanding payments, including Royalty Fees, System Marketing Fees, and other amounts owed to Dermani Medspa and third-party vendors, must be settled (excluding amounts under good faith dispute). Additionally, the franchisee must correct any existing deficiencies in the franchised business that Dermani Medspa has communicated in writing or electronically.
Furthermore, neither the transferee nor its owners can have an ownership interest in or perform services for a competitive business. All required personnel of the transferee must complete Dermani Medspa's training program. The franchisee must also secure the landlord's approval to transfer the lease or sublease the premises to the transferee. The transferor remains liable for all obligations incurred before the transfer date and must execute any instruments requested by Dermani Medspa to evidence this liability. Finally, the transferee must sign Dermani Medspa's current franchise agreement form, which may differ materially from the original agreement.
In practical terms, a Dermani Medspa franchisee needs to meticulously follow these steps to ensure a smooth and approved transfer. Failure to comply with any of these conditions would constitute a violation of the franchise agreement and could prevent the transfer from being approved. Prospective franchisees should carefully review Section 12 of the Franchise Agreement and consult with legal counsel to fully understand their obligations and the transfer process.