After termination, transfer, or expiration of the Dermani Medspa agreement, for how long are franchisees restricted from engaging in a Competitive Business?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
15.4. Covenant Not to Compete.
15.4.1. Upon termination or expiration of this Agreement you agree that, for two (2) years beginning on the later to occur of (i) the effective date of termination or expiration, or (ii) the date on which all persons restricted by this Section 15.4 begin to comply with this Section 15.4, 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, 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 may be located or operating:
- (a) at the Premises;
- (b) within the Territory;
- (c) within five (5) miles of the border of the Territory; or;
- (d) within the territory, area, or market area of any other Franchised Business or Medspa in operation or under construction on the latter of the effective date of the
termination or expiration of this Agreement or the date on which all persons restricted by this Section begin to comply with this Section.
15.4.2.
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 15.4.
- 15.4.3.
These restrictions also apply after transfers, as provided in Section 12 above.
If any person restricted by this Section refuses voluntarily to comply with these obligations, the two (2) year period for that person will commence with the entry of a court order enforcing this provision.
You expressly acknowledge that you possess skills and abilities of a general nature and have other opportunities for exploiting these skills.
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
According to Dermani Medspa's 2025 Franchise Disclosure Document, franchisees are restricted from engaging in a Competitive Business for two years after the termination, transfer, or expiration of the franchise agreement. The two-year period begins on the later of (i) the effective date of termination or expiration, (ii) the date on which all persons restricted by this Section 15.4 begin to comply with this Section 15.4, 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. This restriction applies to the franchisee, their immediate family members, and any entity they are associated with.
The restrictions prevent the franchisee from owning, maintaining, operating, engaging in, managing, franchising, or licensing a Competitive Business. It also prohibits them from having any direct or indirect controlling or non-controlling interest in a Competitive Business, or from being or performing services as a partner, director, manager, employee, consultant, representative, or agent in any Competitive Business. The Competitive Business is defined as one that is located at the former franchise premises, within the territory, within five miles of the border of the territory, or within the territory, area, or market area of any other Dermani Medspa franchise.
There is an exception to this restriction: equity ownership of less than five percent (5%) of a Competitive Business whose stock is publicly traded on a recognized United States stock exchange is permitted. The restrictions also apply after transfers. If any person restricted by this section refuses to comply, the two-year period will commence with the entry of a court order enforcing the provision. Dermani Medspa emphasizes that franchisees possess general skills and abilities and have other opportunities to use these skills.