What conditions must a Deka Lash area developer comply with to maintain an exclusive territory?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
to establish policies relating to allocation of funds when a person buys a gift certificate in one studio, but it is redeemed in another studio.
Area Development Agreement
If you enter into an Area Development Agreement, you will obtain the right to own and operate multiple Franchised Businesses in a Development Area according to a mandatory Development Schedule. The size of the Development Area will depend upon the number of Franchised Businesses you are required to open. Provided you comply with the terms of the Area Development Agreement, and any Franchise Agreements signed for Franchised Businesses within the Development Area, we grant to you an exclusive territory in which we will not locate another Deka Lash Studio operating under the Marks or marks similar to the Marks, whether franchised or affiliate-owned, in your Development Area.
Note, that while we will not license anyone the right to open or operate, any Franchised Business that is physically located within the Development Area, that does not mean you can open or operate a Franchised Business anywhere within that Development Area. If a franchisee secures a location near your development area, and their associated protective radius (generally 1.5 miles) overlaps into your Development Area, you will not be able to locate a studio within the protected radius that overlaps your Development Area. We will let you know of any existing studios that have protective radius overlapping into your Development Area prior to execution of this agreement, but we make no warranties that a franchisee will not subsequently choose a location that creates a protective radius that overlaps into the Development Area.
We do not grant you options, rights of first refusal, or similar rights to acquire additional franchises under the Area Development Agreement.
Each Franchised Business must be opened according to the Development Schedule described in the Area Development Agreement, which will specify the number of Franchised Businesses to be open and the time frames within which they must be open.
Area Development Territorial Exclusivity. Your territorial exclusivity is not dependent upon meeting the development schedule, achievement of a certain sales volume, market penetration or any other contingency. However, you can lose all rights to the undeveloped portion of a development area for failure to meet a development schedule.
Source: Item 12 — TERRITORY (FDD pages 40–44)
What This Means (2024 FDD)
According to Deka Lash's 2024 Franchise Disclosure Document, an area developer obtains the right to own and operate multiple franchise locations within a specific development area, according to a mandatory development schedule. Provided the area developer complies with the terms of the Area Development Agreement, and any Franchise Agreements signed for Franchised Businesses within the Development Area, Deka Lash grants an exclusive territory in which they will not locate another Deka Lash studio operating under the Marks or marks similar to the Marks, whether franchised or affiliate-owned, in your Development Area.
However, the exclusivity does not mean the developer can operate a Franchised Business anywhere within that Development Area. If a franchisee secures a location near your development area, and their associated protective radius (generally 1.5 miles) overlaps into your Development Area, you will not be able to locate a studio within the protected radius that overlaps your Development Area. Deka Lash will inform you of any existing studios that have protective radius overlapping into your Development Area prior to execution of this agreement, but they make no warranties that a franchisee will not subsequently choose a location that creates a protective radius that overlaps into the Development Area.
It is important to note that while the area developer's territorial exclusivity is not dependent upon meeting the development schedule, achievement of a certain sales volume, market penetration or any other contingency, they can lose all rights to the undeveloped portion of a development area for failure to meet a development schedule. Additionally, if at any point, the area developer is (a) not current on obligations owed to Deka Lash, (b) not in compliance with their Franchise Agreement(s) or Development Agreement, or (c) not showing a good faith effort in trying to secure and open their next scheduled studio, their territory and remaining development rights will be immediately terminated.