Under what conditions is an individual prohibited from owning or operating a Competitive Business after leaving their position with a Dermani Medspa franchisee?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Except as otherwise approved in writing by the Company, I shall not, while in my position with the Franchisee, either directly or indirectly for myself, or through, on behalf of, or in conjunction with any person, persons, partnership, or corporation, own, maintain, operate, engage in, act as a consultant for, perform services for, or have any interest in any medspa or medical care business which: (a) is the same as, or substantially similar to, a Franchised Business; or (b) offers to sell or sells any products or services which are the same as, or substantially similar to, any of the products offered by a Franchised Business (a "Competitive Business"); and for a continuous uninterrupted period commencing upon the cessation or termination of my position with Franchisee, regardless of the cause for termination, or upon the expiration, termination, transfer, or assignment of the Franchise Agreement, whichever occurs first, and continuing for two (2) years thereafter, either directly or indirectly, for myself, or through, on behalf of, or in conjunction with any person, persons, partnership, or corporation, own, maintain, operate, engage in, act as a consultant for, perform services for, or have any interest in any Competitive Business that is, or is intended to be, located at or within:
- 7.1 Franchisee's Territory, as defined in the Franchise Agreement ("Franchisee's Territory");
- 7.2 Five (5) miles of the border of Franchisee's Territory; or
- 7.3 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 the Franchise Agreement.
The prohibitions in this Paragraph 7 do not apply to my interests in or activities performed in connection with a Franchised Business. This restriction does not apply to my ownership of less than five percent (5%) beneficial interest in the outstanding securities of any publicly held company.
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
According to Dermani Medspa's 2025 Franchise Disclosure Document, an individual is restricted from engaging in a Competitive Business after leaving their position with a Dermani Medspa franchisee. This restriction begins upon the cessation or termination of their position, or upon the expiration, termination, transfer, or assignment of the Franchise Agreement, whichever occurs first. The restriction lasts for a continuous, uninterrupted period of two years.
During this two-year period, the individual is prohibited from owning, maintaining, operating, engaging in, acting as a consultant for, performing services for, or having any interest in a Competitive Business. This includes businesses that are the same as or substantially similar to a Dermani Medspa franchise, or those that offer or sell similar products or services. The geographic scope of this restriction includes the franchisee's territory, an area within five miles of the border of the franchisee's territory, and the territory, area, or market area of any other Dermani Medspa franchise in operation or under construction at the time of termination or expiration.
However, there are exceptions to these restrictions. The prohibitions do not apply to interests or activities performed in connection with another Dermani Medspa franchise. Additionally, the restriction does not apply to ownership of less than five percent beneficial interest in the outstanding securities of any publicly held company. This means a former employee could invest in a publicly traded competitor, as long as their stake remains below the 5% threshold.
This non-compete agreement is a standard practice in franchising to protect the franchisor's and franchisees' investments and confidential information. Prospective franchisees should carefully consider these restrictions and how they might impact their future career options before investing in a Dermani Medspa franchise.