What condition must Deka Lash meet before requesting the release of escrow funds from a Deka Lash franchisee?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
VIRGINIA ADDENDUM TO THE FRANCHISE AGREEMENT
If any of the terms of the Franchise Agreement are inconsistent with the terms below, the terms below control
The Franchise Agreement is modified to also provide:
Escrow Account:
Due to our financial condition, the Virginia State Corporation Commission's Division of Securities and Retail Franchising requires us to establish an escrow account for all initial franchise fees that we charge. You shall make your check for franchise fees or other payments to the depository (Truist Bank) and send the check to us. Within two business days of our receipt of the check, we will deposit the check into an escrow account that we have established with Truist.Bank.
When we complete all of our pre-opening obligations to you (listed in Item 11 of this Disclosure Document), we will request that you affirm, in writing, that we have completed those obli
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to the 2024 Deka Lash Franchise Disclosure Document, due to Deka Lash's financial condition, the Virginia State Corporation Commission's Division of Securities and Retail Franchising requires Deka Lash to establish an escrow account for all initial franchise fees that they charge. The franchisee will make their check for franchise fees or other payments to the depository (Truist Bank) and send the check to Deka Lash. Within two business days of Deka Lash's receipt of the check, they will deposit the check into an escrow account that they have established with Truist Bank.
Before Deka Lash can request the release of these escrowed funds, they must complete all of their pre-opening obligations to the franchisee, as listed in Item 11 of the Disclosure Document. After completing these obligations, Deka Lash will request that the franchisee affirm, in writing, that Deka Lash has completed those obligations.
This requirement is specific to franchisees in Virginia due to Deka Lash's financial condition and is designed to protect the franchisee's investment until Deka Lash has fulfilled its initial obligations. This arrangement ensures that Deka Lash is held accountable for providing the necessary support and resources to get the franchise operational before accessing the franchise fees.