Does the Dermani Medspa agreement prevent a franchisee from diverting potential customers of the Franchised Business to a Competitive Business?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
9. COVENANTS AND RESTRICTIONS ON COMPETITION
9.1. During the Term. You acknowledge that this Agreement will give you access to valuable and Confidential Information regarding the System, including our business development strategy and the sales, promotional, managing, and marketing methods of dermani MEDSPA®. You agree that during the term of this Agreement, you will not, without our prior written consent, either directly or indirectly through any other person or entity:
- 9.1.1. develop, build, own, maintain, operate, manage, engage in, franchise, or license, or have any direct or indirect controlling or non-controlling interest as an owner – whether of record, beneficially, or otherwise – in a Competitive Business, wherever located or operating (except that an equity ownership of less than five percent (5%) of a Competitive Business whose stock or other forms of ownership interest are publicly traded on a recognized United States stock exchange will not be deemed to violate this subparagraph);
- 9.1.2. be or perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, wherever located or operating;
- 9.1.3. divert or attempt to divert any actual or potential business or customer of the Franchised Business to a Competitive Business; or
- 9.1.4. In any manner interfere with, disturb, disrupt, impair, diminish, or otherwise jeopardize our business or that of our affiliates or any of our developers or franchisees.
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
According to Dermani Medspa's 2025 Franchise Disclosure Document, the franchise agreement prohibits franchisees from diverting or attempting to divert any actual or potential business or customer of the Franchised Business to a Competitive Business during the term of the agreement. This restriction is in place to protect Dermani Medspa's customer base and prevent franchisees from using the franchised business's resources and reputation to benefit a competing business.
This non-diversion clause is a standard provision in franchise agreements. It ensures that franchisees focus their efforts on growing the Dermani Medspa business and do not exploit their position to promote a competing venture. The agreement specifies that franchisees cannot directly or indirectly divert business, meaning they cannot use intermediaries or other entities to circumvent the restriction.
For a prospective Dermani Medspa franchisee, this means they must fully commit to the success of their franchised location and cannot operate or promote any competing business simultaneously. Violating this clause could lead to legal action or termination of the franchise agreement. This restriction applies during the term of the agreement, but additional restrictions apply after termination, expiration, or transfer.