What evidence of compliance with termination obligations must I provide to Dermani Medspa, and within what timeframe?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
After Termination, Expiration, or Transfer.
9.1.5. Upon termination, transfer, or expiration of this Agreement you agree that, for two (2) years beginning on the later of (i) the effective date of termination, transfer, or expiration, or (ii) the date on which all persons restricted by this Section 9.2 begin to comply with this Section 9.2, 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, 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 the obligations under this Section 8.2 commence, except as permitted by any franchise agreements that remain in effect between you and us. You agree that the length of time in this Section 9.2 will be tolled for any period during which you are in breach of the covenants set forth in this Section 9.2, or any other period during which we seek to enforce this Agreement.
9.1.6. 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 9.
9.2. Individual Covenants.
At our request, you shall require and obtain execution of covenants similar to those set forth in Sections 9.1 and 9.2 (as modified to apply to an individual) from any or all of the following persons: Your Owners, officers and directors.
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
Based on the 2025 Dermani Medspa FDD, specific requirements for evidence of compliance with termination obligations are not explicitly detailed. However, the FDD does outline general obligations upon termination, transfer, or expiration of the agreement.
Upon termination, transfer, or expiration of the agreement, a franchisee is subject to a non-compete clause for two years. This prevents the franchisee from owning, operating, or being involved with a competitive business within the Development Area or a five-mile radius of it. The time frame may be extended if the franchisee breaches the agreement or if Dermani Medspa has to pursue litigation to enforce the agreement. An exception exists for owning less than 5% of a publicly traded competitive business.
The FDD also mentions that Dermani Medspa can request that the franchisee obtain similar covenants from owners, officers, and directors. While the FDD does not specify the exact evidence required to demonstrate compliance with these obligations, it is important for prospective franchisees to discuss these requirements with Dermani Medspa to fully understand their responsibilities and how to properly document their adherence to the termination terms.