After termination or expiration of the Dermani Medspa agreement, what activities are the Practice restricted from engaging in?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
Furthermore, upon the termination or expiration of this Agreement, the Practice shall not, for a period of two (2) years, acquire, establish, operate, manage, control, own (debt or equity, but excluding ownership of less than five percent of the equity of any publicly
traded entity), or maintain any other interest in, in any such case within the United States any entity or enterprise that provides the Professional Services at the Location or within a ten (10) mile radius of the Location. Practice acknowledges that the geographic boundaries, scope of prohibited activities and the duration of this Section 4.04 are reasonable and are no broader than are necessary to protect the legitimate business interests of Manager. The Parties agree and stipulate that the agreements and covenants not to compete contained in this Section 4.04 are fair and reasonable in light of all of the facts and circumstances of the relationship between Manager and Practice. Manager and Practice are aware, however, that in certain circumstances courts have refused to enforce certain agreements not to compete. Therefore, in furtherance of, and not in derogation of, the provisions of this Section 4.04, Manager and Practice agree that, in the event a court should decline to enforce any of the provisions of this Section 4.04, this Section 4.04 shall be deemed to be modified or reformed to restrict Practice's competition with Manager to the maximum extent, as to time, geography and business scope, which the court shall find enforceable; provided, however, that in no event shall the provisions of this Section 4.04 be deemed to be more restrictive to Practice than those contained herein. [Practice shall ensure that any Practitioner that provides Professional Services agrees in writing to the same restrictions in this Section 4.04 that apply to Practice; provided, however, that Practice shall allow Practitioners to be employed by, operate, manage, control, establish, own, or maintain an entity that provides Professional Services at the Location under a management agreement between Manager and a professional corporation.] [Manager acknowledges and agrees that during the term of this Agreement, Practice and its Practitioners may continue to perform and maintain the [medical directorships] [preferred provider services] that it and they perform as of the Effective Date ("Permitted Relationships") without violating the terms of this Section 4.04. The Permitted Relationships are listed on Schedule 4.04.]
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
According to the 2025 Dermani Medspa FDD, after the termination or expiration of the agreement, the Practice faces certain restrictions. For a period of two years, the Practice cannot acquire, establish, operate, manage, control, own (either through debt or equity, excluding ownership of less than 5% of a publicly traded entity), or maintain any interest in any entity or enterprise that provides professional services at the Location or within a 10-mile radius of the Location within the United States.
The Dermani Medspa agreement states that these restrictions are deemed reasonable to protect the legitimate business interests of the Manager. The agreement also anticipates the possibility that courts may not fully enforce these non-compete agreements. Therefore, the agreement stipulates that if a court finds any provision unenforceable, the restrictions should be modified to the maximum extent permissible by the court in terms of time, geography, and business scope, while ensuring the restrictions are not more severe than originally stated in the agreement.
The agreement also requires the Practice to ensure that any Practitioner providing Professional Services agrees in writing to the same restrictions. However, Practitioners are allowed to be employed by, operate, manage, control, establish, own, or maintain an entity that provides Professional Services at the Location under a management agreement between Manager and a professional corporation. Furthermore, the Manager acknowledges that during the term of the agreement, the Practice and its Practitioners may continue to perform and maintain medical directorships and preferred provider services that they performed as of the Effective Date without violating the terms of the agreement, as long as these Permitted Relationships are listed on Schedule 4.04.