What constitutes an 'affiliate' in the context of the Dermani Medspa Practice's restrictive covenant?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
During the term of this Agreement, Practice shall not directly or indirectly, through an affiliate (which shall not include independent contractor physicians of Practice) or otherwise, without the prior written consent of Manager, which consent may be withheld by Manager in its sole discretion, acquire, establish, operate, manage, control, own (debt or equity, but excluding ownership of less than five percent of the equity of any publicly traded entity), or maintain any other interest in, in any such case within the United States: (a) any entity or enterprise, other than Practice, that provides the Professional Services; (b) any entity or enterprise that provides administrative, operational and non-professional services to Practitioners or offers any type of services or products similar to those that Manager offers; or (c) any health maintenance organization, preferred provider organization, exclusive provider organization, or similar entity or organization.
Furthermore, upon the termination or expiration of this Agreement, the Practice shall not, for a period of two (2) years, acquire, establish, operate, manage, control, own (debt or equity, but excluding ownership of less than five percent of the equity of any publicly
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
According to the 2025 Dermani Medspa FDD, the Practice Restrictive Covenant states that during the agreement's term, the Practice cannot directly or indirectly, through an affiliate or otherwise, engage in certain competitive activities without the Manager's prior written consent. However, the definition of 'affiliate' specifically excludes independent contractor physicians of the Practice.
This means that the Practice itself is restricted from certain actions, but these restrictions do not extend to physicians working as independent contractors for the Dermani Medspa location. The Manager has the sole discretion to withhold consent for the Practice to engage in activities such as acquiring, establishing, operating, managing, controlling, or owning any other entity that provides professional services, administrative services to practitioners, or services/products similar to those offered by the Manager. This also includes health maintenance organizations, preferred provider organizations, or similar entities.
Furthermore, upon termination or expiration of the agreement, the Practice is restricted for two years from engaging in similar activities. This restriction on the Practice applies to activities within the United States. However, the definition of 'affiliate' excludes independent contractor physicians of the Practice.