How does Deka Lash collect the development fee under the Area Development Agreement?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
HAWAII ADDENDUM TO THE AREA DEVELOPMENT AGREEMENT
If any of the terms of the Area Development Agreement are inconsistent with the terms below, the terms below control.
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- Initial Fee Deferral. The Area Development Agreement is modified to also provide that we will collect the development fee on a pro-rated basis as each outlet is opened under the development agreement.
DEVELOPER FRANCHISOR DL Franchising, LLC (Name of corporation, partnership, limited liability company or other legal entity or individually if blank)
NORTH DAKOTA ADDENDUM TO THE AREA DEVELOPMENT AGREEMENT
If any of the terms of the Area Development Agreement are inconsistent with the terms below, the terms below control.
Initial Fee Deferral:
The Area Development Agreement is modified to also state that the franchisor defers the receipt of the initial franchise fee until all initial obligations owed to the franchisee under the franchise agreement or other documents have been fulfilled by the franchisor and the franchisee is open for business
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to the 2024 Deka Lash Franchise Disclosure Document, the standard procedure is to collect the development fee upfront. However, there are exceptions in certain states.
Specifically, the Hawaii Addendum to the Area Development Agreement modifies the standard agreement to allow Deka Lash to collect the development fee on a pro-rated basis. This means that instead of paying the entire fee upfront, the developer pays a portion of the fee as each new Deka Lash outlet is opened under the development agreement.
Similarly, the North Dakota Addendum to the Area Development Agreement states that Deka Lash defers the receipt of the initial franchise fee until all initial obligations owed to the franchisee under the franchise agreement or other documents have been fulfilled by the franchisor and the franchisee is open for business. This means that in North Dakota, the franchisee does not pay the initial franchise fee until their Deka Lash studio is ready to open and Deka Lash has met its initial obligations.
These addenda demonstrate that Deka Lash is willing to modify the payment schedule for the development fee in certain circumstances, particularly in states with specific franchise laws. Prospective franchisees should carefully review any state-specific addenda to the Area Development Agreement to understand the fee payment terms applicable to their situation.