What is considered a 'Competitive Business' that a former Dermani Medspa franchisee is restricted from engaging in?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
demonstrate came to Member's attention by lawful means prior to disclosure to Member or which, at the time of the disclosure to Member, had become a part of the public domain. In addition, there may be certain, limited circumstances where applicable law allows for the disclosure of certain trade secrets, as specified in the Manuals.
2. Covenants Not to Compete.
(a) Member specifically acknowledges that, pursuant to the Area Development Agreement, and by virtue of his or her position with Developer, Member will receive valuable specialized training and Confidential Information, including, without limitation, information regarding the operational, sales, promotional, and marketing methods and techniques of Franchisor and the System.
(b) Member covenants and agrees that during the term of the Area Development Agreement, except as otherwise approved in writing by Franchisor, Member will not, either directly or indirectly, for him or herself, or through, on behalf of, or in conjunction with any person, persons, partnership, corporation, or entity:
(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.
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 applies to restrictions during the term of the Area Development Agreement.
Additionally, after termination or expiration of the Franchise Agreement, a franchisee is restricted from owning, operating, or being involved with a business that is the same as or substantially similar to a Franchised Business, or that offers to sell or sells any products or services which are the same as, or substantially similar to, any of the products offered by a Franchised Business. This restriction applies within the Franchisee's Territory, within five miles of the border of the Franchisee's Territory, or within the territory of any other Franchised Business in operation.
However, these restrictions do not apply to ownership of less than five percent of a Competitive Business whose stock is publicly traded on a recognized United States stock exchange. This exception provides some flexibility for franchisees to invest in publicly traded companies that may be considered competitive without violating the non-compete agreement.