What is the duration of the restrictive covenant for a Dermani Medspa Practice after the termination or expiration of the agreement?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
15.4. Covenant Not to Compete.
15.4.1. Upon termination or expiration of this Agreement you agree that, for two (2) years beginning on the later to occur of (i) the effective date of termination or expiration, or (ii) the date on which all persons restricted by this Section 15.4 begin to comply with this Section 15.4, or (iii) if litigation is necessary to enforce this Agreement, the date of entry of an order by a court of competent jurisdiction enforcing this Agreement: you and your immediate family members, for yourself, or through, on behalf of, or in conjunction with any person, persons, partnership, corporation, limited liability company, or other entity, will not own, maintain, operate, 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) or be or perform services as a partner, director, manager, employee, consultant, representative, or agent in any Competitive Business, that is or may be located or operating:
- (a) at the Premises;
- (b) within the Territory;
- (c) within five (5) miles of the border of the Territory; or;
- (d) within the territory, area, or market area of any other Franchised Business or Medspa in operation or under construction on the latter of the effective date of the
termination or expiration of this Agreement or the date on which all persons restricted by this Section begin to comply with this Section.
15.4.2.
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 Section 15.4.
- 15.4.3.
These restrictions also apply after transfers, as provided in Section 12 above.
If any person restricted by this Section refuses voluntarily to comply with these obligations, the two (2) year period for that person will commence with the entry of a court order enforcing this provision.
You expressly acknowledge that you possess skills and abilities of a general nature and have other opportunities for exploiting these skills.
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
According to Dermani Medspa's 2025 Franchise Disclosure Document, franchisees are subject to a restrictive covenant for two years after the termination or expiration of their Franchise Agreement. This two-year period begins on the later of three possible dates: the effective date of termination or expiration, the date when all individuals bound by the covenant begin to comply with it, or, if litigation is necessary to enforce the agreement, the date a court order is issued.
During this two-year period, the franchisee and their immediate family members are prohibited from owning, operating, or being involved in any capacity (owner, partner, director, manager, employee, consultant, etc.) with a Competitive Business. This restriction applies to businesses located at the premises, within the territory, within five miles of the territory's border, or within the territory, area, or market area of any other Dermani Medspa that is operating or under construction. An exception exists for equity ownership of less than 5% in a publicly traded Competitive Business.
The covenant not to compete aims to protect Dermani Medspa's business interests by preventing former franchisees from using the brand's confidential information and established customer base to compete against the system. The agreement specifies that the duration of the non-compete period will be extended for any time the franchisee is in breach of the covenant or if Dermani Medspa has to pursue legal action to enforce the agreement. This ensures that the full two-year restriction is effectively enforced.