Does a claim against Dermani Medspa provide a defense against Dermani Medspa's enforcement of Section 9?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
After Termination, Expiration, or Transfer.
9.1.5. Upon termination, transfer, or expiration of this Agreement you agree that, for two (2) years beginning on the later of (i) the effective date of termination, transfer, or expiration, or (ii) the date on which all persons restricted by this Section 9.2 begin to comply with this Section 9.2, or (iii) if litigation is necessary to enforce this Agreement, the date of entry of an order by a court of competent jurisdiction enforcing this Agreement: you and your immediate family members, for yourself, or through, on behalf of, or in conjunction with any person, persons, partnership, corporation, limited liability company, or other entity, will not 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 the obligations under this Section 8.2 commence, except as permitted by any franchise agreements that remain in effect between you and us. You agree that the length of time in this Section 9.2 will be tolled for any period during which you are in breach of the covenants set forth in this Section 9.2, or any other period during which we seek to enforce this Agreement.
- 9.1.6. 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 Section 9.
- 9.2. Individual Covenants.
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
Based on the 2025 Dermani Medspa Franchise Disclosure Document, Section 9.1.5 outlines the franchisee's obligations upon termination, transfer, or expiration of the agreement, including non-compete clauses. It states that for two years, the franchisee and their immediate family cannot engage in a Competitive Business within the Development Area or a five-mile radius of any Dermani Medspa. Section 9.1.6 clarifies that owning less than 5% of a publicly traded Competitive Business does not violate this section. Section 9.2 allows Dermani Medspa to request similar covenants from the franchisee's owners, officers, and directors.
The document does not explicitly state whether a claim against Dermani Medspa provides a defense against the enforcement of Section 9. However, Section 11.3.1 indicates that the franchisee agrees to indemnify Dermani Medspa against claims arising from the Franchised Business's operation or the franchisee's breach of the agreement, unless the claims are caused solely by Dermani Medspa's gross negligence or willful misconduct. This suggests that the franchisee's ability to defend against Section 9 enforcement may depend on the nature of the claim and whether it is attributable to Dermani Medspa's actions.
In practical terms, a franchisee facing enforcement of Section 9 should carefully review the terms of the agreement and any potential claims against Dermani Medspa. If the claim is related to Dermani Medspa's gross negligence or willful misconduct, it may provide a basis for defense. However, the franchisee will likely bear the burden of proving such negligence or misconduct in court. The franchisee should also consider the potential costs of litigation and the strength of their legal position before challenging the enforcement of Section 9.
Prospective franchisees should seek legal counsel to fully understand their rights and obligations under the franchise agreement, including the enforceability of Section 9 and the potential defenses available in the event of a dispute. It is important to assess the risks and benefits of investing in a Dermani Medspa franchise and to negotiate favorable terms where possible.