Does the Dermani Medspa franchise agreement consider a transfer of ownership interest in the franchisee entity as a 'transfer' requiring franchisor approval?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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)
According to the 2025 Dermani Medspa Franchise Disclosure Document, the franchise agreement stipulates that a transfer of ownership interest in the franchisee entity is indeed considered a 'transfer' that requires prior written approval from Dermani Medspa. This includes the transfer of capital stock, partnership, membership interests, or any other form of ownership interest.
The Dermani Medspa franchise agreement defines 'transfer' broadly to include both voluntary and involuntary, direct and indirect assignments, sales, gifts, or other dispositions. This definition extends to events such as mergers, consolidations, the issuance of additional securities, or any sale of securities convertible to an ownership interest. It also encompasses transfers of interest in the franchisee, the Franchise Agreement itself, the Franchised Business, or substantially all of the franchisee's assets, as well as transfers involving the franchisee's owners in situations like divorce, insolvency, entity dissolution, or by operation of law.
This requirement for franchisor approval is in place because Dermani Medspa relies on its perception of the franchisee's individual or collective character, skill, aptitude, attitude, business ability, and financial capacity when granting the franchise rights. Therefore, any change in ownership must be vetted by Dermani Medspa to ensure that the new owner(s) meet their standards and can properly operate the Franchised Business. A prospective franchisee should be aware that failure to obtain this approval could result in a breach of the franchise agreement.