Under what condition is equity ownership of a Competitive Business NOT considered a violation of Section 9 for Dermani Medspa franchisees?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
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 9.
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
According to Dermani Medspa's 2025 Franchise Disclosure Document, a franchisee's equity ownership in a Competitive Business will not be considered a violation of Section 9 under specific conditions. This exception applies if the equity ownership is less than five percent (5%).
However, this exception is further qualified. The Competitive Business must have its stock or other forms of ownership interest publicly traded on a recognized United States stock exchange. This means the company must be listed on a major exchange like the NYSE or NASDAQ.
This clause protects Dermani Medspa franchisees from inadvertently violating the agreement by holding small, passive investments in publicly traded companies that might be considered competitors. It allows franchisees to diversify their investment portfolios without fear of breaching their franchise agreement, provided they stay below the 5% ownership threshold and the company is publicly traded on a recognized U.S. stock exchange.