Does the Dermani Medspa agreement create an employer/employee relationship between the Manager and the Practice?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
- 3.01. Administrative Services. Consistent with applicable federal, state and local laws, Practice hereby engages Manager on an exclusive basis to provide administrative, operational and non-professional services to Practice. Manager's duties include, but are not limited to, providing the services set forth on attached Exhibit A (collectively, the "Administrative Services"). Exhibit A may be amended or substituted from time to time, as mutually agreed by the Parties. The amended Exhibit A shall state the date upon which all changes are effective.
- 3.02. Manager Personnel. Manager shall provide the personnel needed to operate and support the provision of Administrative Services ("Manager Personnel"). Manager shall recruit, hire, supervise, monitor, train, discipline, and terminate Manger Personnel and shall maintain and provide storage facilities for the human resource records and other employment information of both Manager Personnel and Practitioners. Consistent with reasonably prudent personnel management policies, Manager shall seek and consider the advice, input, and requests of Practice in regards to Manager Personnel matters. Practice shall at all times have discretion over all decisions relating to Practitioners.
- 3.03. Advisors, Consultants, Subcontractors, and Affiliates. Manager may utilize the services of advisors, consultants, subcontractors, and affiliates as it deems necessary to carry out the Administrative Services; provided, however, if Practice delivers to Manager a written good faith and reasonable objection against the continued use of any particular advisor, consultant, subcontractor or affiliate, Manager shall consider such objection in good faith. Practice acknowledges and understands that Manager operates as a franchisee of "dermani MEDSPA Franchising, LLC" (the "Franchisor") and Franchisor may be authorized to provide some, or provide support for some Administrative Services.
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
According to the 2025 Dermani Medspa FDD, the franchise agreement does not establish an employer/employee relationship between the Manager and the Practice. Instead, the franchisee (as Manager) provides administrative, operational, and non-professional services to a separate Professional Corporation (PC) that delivers the medical services. The FDD emphasizes that the Manager's role is strictly administrative and that the Practice (or PC) retains full authority over all decisions related to the medical Practitioners.
The Dermani Medspa franchisee, as the Manager, is responsible for recruiting, hiring, supervising, training, disciplining, and terminating the Manager Personnel needed to provide Administrative Services. However, the Practice retains discretion over all decisions relating to Practitioners. The Manager may utilize advisors, consultants, subcontractors, and affiliates to carry out the Administrative Services, but the Practice can object to the continued use of any particular advisor, consultant, subcontractor, or affiliate.
This structure is designed to ensure compliance with laws prohibiting the corporate practice of medicine, where non-licensed individuals or entities cannot control medical decisions. The Dermani Medspa franchisee must have a Management Agreement in effect with a PC at all times, and the services available through the PC must align with the franchise agreement. This arrangement aims to maintain a clear separation between the administrative and medical functions of the business, preventing the franchisee from exerting undue influence over medical professionals or the practice of medicine.