Does Dermani Medspa have the right to acquire businesses competing with Dermani Medspa franchises?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
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- the right to acquire the assets or ownership interests of one or more businesses that operate, and/or has granted franchises, licenses, or similar rights to one or more third parties to operate, businesses similar to and/or competing with dermani MEDSPA®s and Franchised Businesses related to dermani MEDSPA®s, and/or the right to be acquired by a competing medical business or medical management business, or by another business, even if such business operates, franchises and/or licenses competitive businesses in the Territory, provided, however, that if we acquire, or are acquired by, such a competing business or chain, we will not establish or grant franchises or licenses to establish new or additional competing businesses under the Marks or the acquired chain's marks in your Territory, although we may rebrand such existing businesses in your Territory to use the Marks and the System, and it is expressly acknowledged by you and us that any such business operations of the same or similar business that existed or operated at the time of such acquisition or transaction shall not constitute a breach of the Franchise Agreement;
Source: Item 12 — TERRITORY (FDD pages 43–46)
What This Means (2025 FDD)
According to Dermani Medspa's 2025 Franchise Disclosure Document, Dermani Medspa retains the right to acquire businesses that compete with its own franchises. This means Dermani Medspa can purchase assets or ownership in businesses that operate similarly to or directly compete with Dermani Medspa franchises. They can also be acquired by a competing medical business. This right extends even to businesses that operate, franchise, or license competitive businesses within a franchisee's territory or development area.
This has significant implications for franchisees. If Dermani Medspa acquires a competing business, it may establish new competing businesses under the Dermani Medspa brand or the acquired chain's brand within the franchisee's territory or development area. While Dermani Medspa states they may rebrand existing businesses in the franchisee's territory to use the Dermani Medspa marks and system, the existence or operation of a similar business at the time of acquisition does not constitute a breach of the franchise agreement.
For prospective franchisees, this clause highlights a potential risk. Dermani Medspa's ability to acquire and rebrand or establish competing businesses could intensify competition within a franchisee's territory. While the franchise agreement offers some territorial protection, this protection is limited by Dermani Medspa's right to acquire competing businesses. This is a fairly common practice in franchising, where franchisors seek to expand their market presence through acquisition, but it's crucial for franchisees to understand how such actions could impact their business.
Therefore, it is important for potential franchisees to carefully consider the implications of this clause and to discuss with Dermani Medspa how they plan to manage potential conflicts of interest or competitive pressures that may arise from acquiring competing businesses. Understanding Dermani Medspa's long-term growth strategy and its approach to managing competition within its franchise network is essential for making an informed investment decision.