What constitutes a violation of the non-compete agreement for a Dermani Medspa franchisee?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
9. COVENANTS AND RESTRICTIONS ON COMPETITION
- 9.1. During the Term. You acknowledge that this Agreement will give you access to valuable and Confidential Information regarding the System, including our business development strategy and the sales, promotional, managing, and marketing methods of dermani MEDSPA®. You agree that during the term of this Agreement, you will not, without our prior written consent, either directly or indirectly through any other person or entity:
- 9.1.1. 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 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.
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
According to the 2025 Dermani Medspa FDD, there are several actions that would violate the non-compete agreement, both during the term of the agreement and after its termination, expiration, or transfer. During the agreement term, without prior written consent from Dermani Medspa, a franchisee cannot directly or indirectly engage in a Competitive Business. This includes developing, building, owning, operating, managing, engaging in, franchising, or licensing a business that offers similar medical spa products or services. It also prohibits having any ownership interest in such a business, with a minor exception of less than 5% ownership in a publicly traded company.
Additionally, during the term of the agreement, a franchisee is prohibited from working as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business. They cannot divert or attempt to divert any actual or potential business or customers from the Dermani Medspa franchise to a Competitive Business. Furthermore, franchisees are barred from interfering with, disturbing, disrupting, impairing, diminishing, or jeopardizing the business of Dermani Medspa, its affiliates, developers, or other franchisees.
After the termination, expiration, or transfer of the agreement, the franchisee is still restricted from certain competitive activities. The franchisee cannot own, maintain, operate, engage in, manage, franchise, or license a Competitive Business, or work in any capacity for a Competitive Business. This restriction applies to businesses located within the Development Area or within a five-mile radius of the Development Area or any other operating Dermani Medspa at the time. These restrictions are in place to protect Dermani Medspa's confidential information, business development strategy, and sales and marketing methods.