Is a Dermani Medspa franchisee allowed to own stock in a publicly traded competitive business?

According to Dermani Medspa's 2025 Franchise Disclosure Document, a franchisee is permitted to hold a small equity stake in a publicly traded competitor. Specifically, the agreement states that owning less than 5% of a Competitive Business's stock does not violate the non-compete clause, provided that the stock is publicly traded on a recognized United States stock exchange. This allowance applies both during the term of the Franchise Agreement and after termination, transfer, or expiration of the agreement.

This provision offers some flexibility for franchisees who may wish to diversify their investments without directly conflicting with their Dermani Medspa business. However, it's crucial to remain below the 5% threshold to avoid violating the franchise agreement. Any ownership stake of 5% or more would be considered a breach of the agreement, potentially leading to legal repercussions.

It is important for prospective franchisees to understand this restriction and ensure compliance. While a small investment in a publicly traded competitor is permitted, exceeding the 5% limit could have significant consequences. Franchisees should consult with legal and financial advisors to fully understand the implications of this clause and ensure they remain in compliance with the franchise agreement.