Does the Dermani Medspa franchise agreement require approval for the transfer of ownership interest in the franchisee?
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 transfer of any ownership interest in the franchisee requires prior written approval from Dermani Medspa. This includes not only direct transfers of the franchise agreement itself, but also any transfer of ownership interest in the franchisee entity, regardless of the size of the interest. Dermani Medspa emphasizes that the franchise rights are granted based on their assessment of the franchisee's character, skills, business ability, and financial capacity.
The term "transfer" is broadly defined to include any voluntary or involuntary assignment, sale, gift, or other disposition, whether direct or indirect. Specific examples include the transfer of capital stock, partnership or membership interests, mergers, consolidations, issuance of additional securities, and transfers of interest due to divorce, insolvency, or dissolution proceedings. This comprehensive definition ensures that all changes in ownership are subject to Dermani Medspa's approval.
Before a transfer can be approved, several conditions must be met. The proposed transferee must meet Dermani Medspa's current standards for new franchisees, demonstrating sufficient business experience, aptitude, and financial resources. All outstanding fees and reports must be up-to-date, and any existing deficiencies in the franchised business must be corrected. The transferee may also be required to upgrade and refurbish the location. The transferee and its owners must not have any involvement with a competitive business, and all required personnel must complete Dermani Medspa's training program. The landlord must also approve the lease transfer or sublease. The transferor remains liable for all obligations incurred before the transfer date and must sign documents to that effect. Finally, the transferee must sign Dermani Medspa's then-current franchise agreement, which may have materially different terms.
These transfer conditions are typical in franchising, as franchisors want to ensure that new owners are qualified and capable of maintaining brand standards and the financial health of the franchise. Prospective Dermani Medspa franchisees should carefully consider these requirements and the potential difficulties in transferring their business in the future.