How long is the 'Post-Term Period' for Dermani Medspa members, during which non-compete restrictions apply?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
9.1.5. Upon termination, transfer, or expiration of this Agreement you agree that, for two (2) years beginning on the later of (i) the effective date of termination, transfer, or expiration, or (ii) the date on which all persons restricted by this Section 9.2 begin to comply with this Section 9.2, or (iii) if litigation is necessary to enforce this Agreement, the date of entry of an order by a court of competent jurisdiction enforcing this Agreement: you and your immediate family members, for yourself, or through, on behalf of, or in conjunction with any person, persons, partnership, corporation, limited liability company, or other entity, will not own, maintain, operate, engage in, manage, franchise or license, or have any direct or indirect controlling or non-controlling interest as an owner (whether of record, beneficially, or otherwise) or be or perform services as a partner, director, manager, employee, consultant, representative, or agent in any Competitive Business, that is, or is intended to be, located within the Development Area, or within a five (5) mile radius of the boarder of the Development Area or any other dermani MEDSPA® operating at the time the obligations under this Section 8.2 commence, except as permitted by any franchise agreements that remain in effect between you and us. You agree that the length of time in this Section 9.2 will be tolled for any period during which you are in breach of the covenants set forth in this Section 9.2, or any other period during which we seek to enforce this Agreement.
9.1.6. 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 Section 9.
9.2. Individual Covenants.
At our request, you shall require and obtain execution of covenants similar to those set forth in Sections 9.1 and 9.2 (as modified to apply to an individual) from any or all of the following persons: Your Owners, officers and directors.
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
According to the 2025 Dermani Medspa FDD, the post-term period during which non-compete restrictions apply is two years. Specifically, after the termination, transfer, or expiration of the Franchise Agreement, the franchisee agrees not to engage in any Competitive Business within the Development Area or within a five-mile radius of it, or near any other Dermani Medspa operating at the time the obligations begin. This restriction lasts for two years, starting from the later of (i) the effective date of termination, transfer, or expiration, (ii) the date on which all persons restricted begin to comply with the non-compete, or (iii) the date of a court order enforcing the agreement if litigation is necessary.
This non-compete clause prevents former franchisees from leveraging Dermani Medspa's confidential information and business model to directly compete with the franchisor. The clause applies not only to the franchisee but also to their immediate family members and any entity they might use to circumvent the agreement. The restrictions include owning, operating, managing, franchising, or working for a competing business.
There is an exception: holding less than 5% equity ownership in a publicly traded Competitive Business is not considered a violation. The agreement also states that the length of the non-compete period will be extended for any time the franchisee is in breach of the covenants or while Dermani Medspa is trying to enforce the agreement. Dermani Medspa may also require similar non-compete agreements from the franchisee's owners, officers, and directors.