Does Deka Lash charge Royalties or Brand Development Fees on sales tax?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
on-Refundable Training Fee**. Additionally, you must pay to us at the same time as the Initial Franchise Fee, a Non-Refundable Training Fee of $3,750. The Training Fee is non-refundable and non-transferable except to an entity owned by the same owners with the same ownership percentages.
4.6 Royalty.
- a) Royalty Start Date. For your first unit, royalties begin twelve (12) months after you execute this Agreement, regardless of when you actually open. If this agreement is signed as the second or subsequent unit in an Area Development Agreement, royalties begin the date you sell your first paid product, service, or membership ("Location Start Date").
- b) Royalty Amount. From the time of your Royalty Start Date until the end of the term of this agreement, you will pay to us as a Royalty Fee equal to the greater of: (i) 6% of all Gross Revenue; or (ii) $600 per month. After your second year of operations, the minimum Royalty Fee increases to the greater of: (i) 6% of all Gross Revenue; or (ii) $1,000 per month.
- c) Payment Dates. As specified in the Operations Manual.
- d) Lifetime of Franchise Agreement. Royalties must be paid for the term of t
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
Based on the 2024 Deka Lash Franchise Disclosure Document, the document does not explicitly state whether royalties or brand development fees are charged on sales tax. However, it does define how the royalty fee and brand development fee are calculated.
The royalty fee is the greater of 6% of all Gross Revenue or $600 per month, increasing to $1,000 per month after the second year of operations. The Brand Development Fee is the greater of 3% of Gross Studio Sales or $500 per month after being open for one year. Gross revenue/sales is the key factor in calculating these fees.
To determine whether sales tax is included in the gross revenue/sales figure upon which these fees are based, it is important for a prospective franchisee to seek clarification from Deka Lash. Specifically, they should ask for a precise definition of "Gross Revenue" and "Gross Studio Sales" and whether these terms include sales tax collected.