Under what circumstances can Dermani Medspa terminate the Area Development Agreement with cause?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
on 12.7 | Florida without regard to its conflict of laws or rules (except to the extent federal law applies). (subject to state law) |#### B. Area Development Agreement
| Provision | Section in Area Development Agreement | Summary | |
|---|---|---|---|
| a. | Length of the franchise term | Section 4.1 | At the earlier of the day the last dermani MEDSPA opens for business or on last day specified in Development Agreement. |
| b. | Renewal or extension of the term | Section 4.2 | There are no renewal terms. |
| c. | Requirements for you to renew or extend | Not Applicable | Not Applicable |
| d. Termination by you | Not Applicable | Not Applicable | |
| e. | Termination by us without cause | Not Applicable | Not Applicable |
| f. | Termination by us with cause | Section 8 | We may terminate your agreement with cause as described in (g)-(h) of this chart. (See Notes 1 and 3). |
| g. | "Cause" defined – curable defaults | Section 8.3 | Any other default not specified in Sections 8.1 or 8.2, such as a material failure to comply with other agreement terms. |
| h. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 51–58)
What This Means (2025 FDD)
According to Dermani Medspa's 2025 Franchise Disclosure Document, the company can terminate the Area Development Agreement with cause under specific circumstances, as detailed in Section 8 of the agreement. These circumstances fall into two main categories: curable defaults and non-curable defaults. Curable defaults, as defined in Section 8.3, include any failure to comply with the terms of the agreement that are not specifically outlined in Sections 8.1 or 8.2, such as a material failure to comply with other agreement terms. This means that if a franchisee breaches a term of the agreement, and the breach can be remedied, it falls under this category.
Non-curable defaults, outlined in Sections 8.1 and 8.2, include more severe situations such as bankruptcy, insolvency, failure to meet the Development Schedule, or termination of a Franchise Agreement. It is important to note that under the U.S. Bankruptcy Code, Dermani Medspa may face limitations in terminating the agreement solely based on a franchisee's bankruptcy filing. The Development Schedule is a critical aspect, as failure to adhere to it can lead to termination.
Upon termination of the Area Development Agreement, the franchisee is obligated to cease developing new Franchised Businesses and Dermani Medspas, and must also fulfill any outstanding payment obligations. Section 8.4 outlines potential actions that Dermani Medspa may take in lieu of termination, providing some flexibility in addressing breaches of the agreement. Prospective franchisees should carefully review Section 8 of the Area Development Agreement to fully understand the conditions that could lead to termination and their obligations in such an event.