What constitutes a material breach of the Dermani Medspa agreement regarding transfers?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
7.2. Transfer By You.
- 7.2.1. You understand and acknowledge that the rights and duties this Agreement creates are personal to you and that we have granted you the right to develop Franchised Businesses and manage dermani MEDSPA®s in reliance upon our perceptions of your individual or collective character, skill, aptitude, attitude, business ability, and financial capacity. Accordingly, none of the following may be transferred without our prior written approval: (i) this Agreement or any interest in this Agreement; (ii) any Franchise Agreement signed by you, your Owner(s), or any of your affiliates pursuant to this Agreement; (iii) any Franchised Business or any right to receive all or a portion of any Franchised Business's or dermani MEDSPA®'s profits or losses or capital appreciation; (iv) your lease(s), mortgage(s), or other agreement where each Franchised Business or dermani MEDSPA® is or will be located; (v) substantially all of the assets of the Franchised Business and dermani MEDSPA®; (vi) any ownership interest in you (regardless of its size); or (vii) any ownership interest in any of your owners. A transfer of the Franchised Business's ownership, possession, or control, or substantially all of its assets, may be made only with a transfer of this Agreement.
- 7.2.2. In this Agreement, the term "transfer" includes a voluntary or involuntary, direct or indirect, assignment, sale, gift, or other disposition. An assignment, sale, gift, or other disposition includes the following events:
- a) transfer of ownership of capital stock, a partnership or membership interest, or another form of ownership interest;
- b) merger or consolidation or issuance of additional securities or other forms of ownership interest;
- c) any sale of a security convertible to an ownership interest;
- d) transfer of an interest in you, this Agreement, any Franchise Agreement(s), the Franchised Business(es), or substantially all of your assets, or your owners in a divorce, insolvency, or entity dissolution proceeding or otherwise by operation of law; or
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
Based on the 2025 Dermani Medspa Franchise Disclosure Document, a franchisee cannot transfer ownership of the franchise without prior written approval from Dermani Medspa. The FDD specifies that the rights and duties outlined in the franchise agreement are personal to the franchisee, and Dermani Medspa has granted the franchise based on their assessment of the franchisee's character, skills, aptitude, business ability, and financial capacity. Therefore, any transfer of the agreement or associated rights requires franchisor approval.
The term "transfer" encompasses a broad range of transactions, including voluntary or involuntary assignments, sales, gifts, or other dispositions, whether direct or indirect. Specific examples of such transfers include changes in ownership of capital stock, partnership interests, or other forms of ownership, as well as mergers, consolidations, or the issuance of additional securities. Transfers can also occur through divorce, insolvency, entity dissolution, or by operation of law. Essentially, any change in ownership or control of the franchise business is considered a transfer that requires Dermani Medspa's consent.
Before a transfer can be approved, several conditions must be met. The potential transferee must meet Dermani Medspa's current standards for new franchisees, demonstrating sufficient business experience, aptitude, and financial resources. All outstanding fees and reports must be up-to-date, and any existing deficiencies in the franchised business must be corrected. The transferee may also be required to upgrade and refurbish the business to meet current standards. The transferee and its owners must not have any involvement with a competitive business, and all required personnel must complete Dermani Medspa's training program. The franchisee must remain liable for all obligations incurred before the transfer date. The landlord must approve the lease transfer, and the transferee must sign the current franchise agreement, which may have different terms than the original agreement.