What businesses are considered a 'Competitive Business' to a Dermani Medspa franchise?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
(i) 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 medical spa centers or businesses that offer medical spa products or services substantially similar to those then offered by dermani MEDSPA®s ("Competitive Business");
(ii) be or perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, wherever located or operating;
(iii) divert or attempt to divert any actual or potential business or customer of the Franchised Business to a Competitive Business; or
(iv) 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.
(c) Member covenants and agrees that during the Post-Term Period (defined below), Member will not, either directly indirectly, own, maintain, operate, engage in, manage, franchise or license, or have any direct or indirect controlling or non-controlling interest as an owner (whether of record, beneficially, or otherwise) or be or perform services as a partner, director, manager, employee, consultant, representative, or agent in any Competitive Business, that is, or is intended to be, located within the Development Area, or within a five (5) mile radius of the boarder of the Development Area or any other dermani MEDSPA® operating at the time.
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
According to the 2025 Dermani Medspa FDD, a 'Competitive Business' includes medical spa centers or businesses that offer medical spa products or services substantially similar to those offered by Dermani Medspa. This definition is crucial for franchisees as it dictates the scope of activities they are restricted from engaging in, both during the term of their agreement and for a specified period afterward. Understanding this definition is essential for avoiding potential breaches of contract and legal disputes with Dermani Medspa.
The FDD specifies that franchisees are prohibited from developing, owning, operating, managing, engaging in, franchising, or licensing a Competitive Business. This restriction extends to having any direct or indirect controlling or non-controlling interest in such businesses. Additionally, franchisees cannot act as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business. These restrictions apply regardless of where the Competitive Business is located or operating, emphasizing the broad reach of the non-compete clause.
Furthermore, franchisees are barred from diverting or attempting to divert any actual or potential business or customers of the franchised Dermani Medspa to a Competitive Business. They are also prohibited from interfering with, disturbing, disrupting, impairing, diminishing, or otherwise jeopardizing Dermani Medspa's business or the business of its affiliates, developers, or other franchisees. These stipulations are designed to protect Dermani Medspa's market share, customer base, and overall business operations from direct competition by its own franchisees.
After the termination of the franchise agreement, the restrictions on engaging in a Competitive Business continue within the Development Area or within a five-mile radius of the Development Area or any other operating Dermani Medspa. This post-term restriction further limits the franchisee's ability to operate a similar business in close proximity to a Dermani Medspa, ensuring continued protection for the franchisor's business interests even after the franchise relationship ends. Prospective franchisees should carefully consider these non-compete obligations and their potential impact on future business ventures.