What is considered a 'Competitive Business' in relation to a Dermani Medspa?
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.
(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.
(d) As used in this Agreement, the term "Post-Term Period" will mean a continuous uninterrupted period of two (2) years from the date of: (a) a transfer of the Member's interest in the rights granted under this Area Development Agreement permitted under Section 7 of the Area Development Agreement; (b) expiration or termination of the Area Development Agreement (regardless of the cause for termination); (c) termination of Member's directorship or officership with Developer; and/or (d) a final order of a duly authorized or a court of competent jurisdiction (after all appeals have been taken) with respect to any of the foregoing or with respect to the enforcement of this Agreement;
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
According to Dermani Medspa's 2025 Franchise Disclosure Document, a 'Competitive Business' is defined in the context of covenants not to compete, which restrict a franchisee (or area developer) from engaging in similar business activities that could harm Dermani Medspa. Specifically, during the term of the Area Development Agreement, a member (franchisee) cannot develop, build, own, operate, manage, engage in, franchise, or license any medical spa centers or businesses that offer medical spa products or services substantially similar to those offered by Dermani Medspa. This restriction applies whether the interest is direct or indirect, controlling or non-controlling.
This definition extends to involvement as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, regardless of its location. Franchisees are also prohibited from diverting or attempting to divert any actual or potential business or customer of the Franchised Business to a Competitive Business, or from interfering with Dermani Medspa's business or that of its affiliates, developers, or other franchisees.
After the termination of the franchise agreement, the restrictions continue within the Development Area or within a five-mile radius of the Development Area's border or any other operating Dermani Medspa. This post-term restriction prevents former franchisees from leveraging their knowledge and experience gained from Dermani Medspa to directly compete against the brand in close proximity. However, 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.
These non-compete covenants are typical in franchising to protect the franchisor's brand, trade secrets, and customer relationships. Prospective Dermani Medspa franchisees should carefully review these restrictions to understand the limitations on their business activities during and after the franchise term, and how these restrictions might affect their future business opportunities.