Does the Dermani Medspa non-compete restriction apply after a transfer of the franchise?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
After Termination, Expiration, or Transfer.
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.
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
According to Dermani Medspa's 2025 Franchise Disclosure Document, the non-compete restriction does apply after the transfer of the franchise. Specifically, upon the transfer of the Franchise Agreement, the franchisee agrees to a non-compete clause that lasts for two years. This two-year period begins on the later of (1) the effective date of the transfer, (2) the date when all restricted individuals begin complying with the non-compete, or (3) the date a court order enforcing the agreement is entered, should litigation be necessary.
During this two-year period, the franchisee and their immediate family members are prohibited from owning, operating, managing, franchising, licensing, or having any ownership interest in a Competitive Business. This restriction applies within the Development Area or within a five-mile radius of the Development Area's border or any other Dermani Medspa operating at the time the obligations commence. An exception exists for equity ownership of less than 5% in a publicly traded Competitive Business.
This non-compete agreement aims to protect Dermani Medspa's business interests and confidential information. The length of the non-compete period can be extended if the franchisee breaches the covenants or if Dermani Medspa needs to pursue legal action to enforce the agreement. Prospective franchisees should carefully consider the implications of this non-compete clause, especially if they plan to remain in the same geographic area after transferring their franchise.