What fees is a Dermani Medspa Practice required to pay the Manager, as outlined in Article IV?

According to the 2025 Dermani Medspa FDD, Article IV outlines the duties of the Practice, including the payment of fees to the Manager as detailed in Article VIII. Article VIII specifies that the Practice must pay the Manager an Administrative Fee in exchange for the administrative services provided. This fee is intended to compensate the Manager for their services and the commitment they make, with the understanding that the fees are negotiated at arm's length and reflect fair market value. The agreement emphasizes that these fees are not inducements for client referrals between the Practice and the Manager.

The Administrative Fee can be structured in one of two ways: a revenue-based fee or a flat fee. The revenue-based fee is calculated as the revenues received by the Practice for professional services, less any expenses incurred by the Practice. Alternatively, the flat fee is a fixed monthly amount, represented as "_____ ($___) per month." If the Practice's revenue in any month is insufficient to cover the full flat Administrative Fee, the unpaid amount accrues and must be paid in accordance with Article VIII.

Prospective Dermani Medspa franchisees should note that the choice between a revenue-based fee and a flat fee may be restricted by state laws. Some states, like Florida and North Carolina, prohibit revenue-based management fees due to fee-splitting laws. Other states, such as Tennessee and Georgia, may allow this fee structure only under specific conditions. The franchisee is responsible for evaluating state law to determine the permissible fee structure and ensuring compliance with all applicable laws and regulations. If the Practice fails to make timely payments, the outstanding amounts will accrue interest at a rate of "[___ percent (___%)] [(the Prime Rate plus one percent (1%) per annum, as published in the Wall Street Journal on the date such shortfall originates)]."