Is a Dermani Medspa franchisee permitted to be a consultant for a Competitive Business under the exclusive relationship agreement?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
- 9.1. During the Term. You acknowledge that this Agreement will give you access to valuable and Confidential Information regarding the System, including our business development strategy and the sales, promotional, managing, and marketing methods of dermani MEDSPA®. You agree that during the term of this Agreement, you will not, without our prior written consent, either directly or indirectly through any other person or entity:
- 9.1.1. develop, build, own, maintain, operate, manage, engage in, franchise, or license, or have any direct or indirect controlling or non-controlling interest as an owner – whether of record, beneficially, or otherwise – in a Competitive Business, wherever located or operating (except that an 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 subparagraph);
- 9.1.2. be or perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, wherever located or operating;
- 9.1.3. divert or attempt to divert any actual or potential business or customer of the Franchised Business to a Competitive Business; or
- 9.1.4. In any manner interfere with, disturb, disrupt, impair, diminish, or otherwise jeopardize our business or that of our affiliates or any of our developers or franchisees.
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
According to the 2025 Dermani Medspa Franchise Disclosure Document, franchisees face restrictions on working with competitive businesses during the term of their agreement. Specifically, without prior written consent from Dermani Medspa, a franchisee cannot perform services as a consultant for a Competitive Business, regardless of its location. A Competitive Business is defined as one that offers medical spa products or services substantially similar to those offered by Dermani Medspa.
This restriction is in place to protect Dermani Medspa's confidential information and business strategies, which franchisees gain access to during the agreement. The FDD states that the franchise agreement gives franchisees access to valuable and confidential information regarding the Dermani Medspa system, including business development strategy and sales, promotional, managing, and marketing methods. By preventing franchisees from consulting for competitors, Dermani Medspa aims to maintain its competitive edge and prevent the leakage of sensitive business information.
After the termination, expiration, or transfer of the franchise agreement, similar restrictions apply. For a specified period and within a defined geographic area, the former franchisee is prohibited from acting as a consultant for a Competitive Business. This post-term restriction is designed to further protect Dermani Medspa's market share and prevent former franchisees from using their knowledge of the Dermani Medspa system to benefit a competing business in close proximity to a Dermani Medspa location.
It is important for prospective franchisees to understand these restrictions and how they might impact their future business opportunities. While the franchise agreement aims to protect Dermani Medspa's interests, franchisees should carefully consider the implications of these non-compete clauses before entering into the agreement. Franchisees should seek legal counsel to fully understand the scope and enforceability of these restrictions in their specific jurisdiction.