What agreements, besides the franchise agreement, are subject to termination if a Deka Lash franchisee breaches a term or provision?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
- 6.2 Termination. Any material violation or breach of any Franchise Agreement or this Agreement will be deemed a material violation of this Agreement and any and all Franchise Agreements between the parties. The non-breaching party will be entitled to enforce the penalties of or to terminate this Agreement or the relevant Franchise Agreement(s) as provided in the relevant Franchise Agreement(s) for enforcement or termination. In addition, Franchisor will have the right, at its option, to terminate this Agreement and all rights granted to Developer hereunder, without affording Developer any opportunity to cure such default, effective upon written notice to Developer, upon the occurrence of any of the following events:
- a) Cease to Actively Engage. If Developer ceases to actively engage in development activities in the Development Area or otherwise abandons its development business for three (3) consecutive months, or any shorter period that indicates an intent by Developer to discontinue development of the Franchised Businesses within the Development Area;
- b) Insolvency. If Developer becomes insolvent, meaning unable to pay bills in the ordinary course of business as they become due;
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to the 2024 Deka Lash Franchise Disclosure Document, a material violation or breach of any Franchise Agreement or the Development Agreement will be deemed a material violation of both agreements. The non-breaching party is entitled to enforce penalties or terminate either the Development Agreement or the relevant Franchise Agreement(s).
Specifically, Deka Lash has the right to terminate the Development Agreement and all rights granted to the developer without allowing an opportunity to cure the default if the developer ceases to actively engage in development activities in the Development Area for three consecutive months, or any shorter period that indicates an intent to discontinue development of Franchised Businesses within the Development Area. Additionally, Deka Lash can terminate the agreement if the developer becomes insolvent, meaning unable to pay bills in the ordinary course of business as they become due.
This means that if a Deka Lash franchisee who has also signed a Development Agreement fails to meet their development obligations or becomes insolvent, Deka Lash can terminate both the Development Agreement and potentially any associated Franchise Agreements. This could result in the franchisee losing the rights to develop further Deka Lash units in their designated area and potentially losing existing franchises if the breach is significant enough.