Is there a geographic limit to the non-compete clause that restricts a Dermani Medspa franchisee from engaging in a Competitive Business?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
ny of such rights, options, arrangements, or areas are terminated or modified, such action will be without prejudice to our right to terminate this Agreement, and we will have the right to retain all Development Fees paid by you, and/or to terminate any other rights or arrangements under this
Agreement at any time thereafter for the same default or as a result of any additional defaults of the terms of this Agreement.
- 8.5. Post-Termination Rights. Upon termination or expiration of this Agreement, you will have no right to establish or operate a Franchised Business or manage any dermani MEDSPA® for which a Franchise Agreement has not been executed by us at the time of termination.
- 8.6. Cross-Defaults. No default under this Area Development Agreement shall constitute a default under any Franchise Agreement between the parties hereto.
9. COVENANTS AND RESTRICTIONS ON COMPETITION
- 9.1. During the Term. You acknowledge that this Agreement will give you access to valuable and Confidential Information regarding the System, including our business development strategy and the sales, promotional, managing, and marketing methods of dermani MEDSPA®. You agree that during the term of this Agreement, you will not, without our prior written consent, either directly or indirectly through any other person or entity:
- 9.1.1. develop, build, own, maintain, operate, manage, 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 – in a Competitive Business, wherever located or operating (except that an 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 subparagraph);
- 9.1.2. be or perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, wherever located or operating;
- 9.1.3. divert or attempt to divert any actual or potential business or customer of the Franchised Business to a Competitive Business; or
- 9.1.4. In any manner interfere with, disturb, disrupt, impair, diminish, or otherwise jeopardize our business or that of our affiliates or any of our developers or franchisees.
After Termination, Expiration, or Transfer.
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
According to the 2025 Dermani Medspa FDD, there are geographic limitations to the non-compete agreements both during the term of the agreement and after termination or expiration. During the term of the Franchise Agreement, franchisees are restricted from engaging in a Competitive Business, wherever located or operating, unless they obtain prior written consent from Dermani Medspa. This restriction applies to developing, owning, operating, managing, franchising, or having any interest in a Competitive Business, as well as performing services for one.
Post-termination, the geographic scope of the non-compete is more defined. For a period of two years after the termination or expiration of the agreement, franchisees are restricted from engaging in a Competitive Business within specific geographic boundaries. These boundaries include the location of the Premises, the Territory granted to the franchisee, or within five miles of the border of the Territory. The restriction also extends to the territory, area, or market area of any other Dermani Medspa franchise in operation or under construction at the time of termination or expiration.
These restrictions are typical in franchising to protect the brand and prevent franchisees from using the franchisor's confidential information and business model to compete against the system, however, the geographic scope can vary. The Dermani Medspa agreement balances the franchisor's need to protect its business with the franchisee's ability to earn a living after the franchise relationship ends. Prospective franchisees should carefully consider these restrictions and how they might impact their future business opportunities.