What is considered a 'transfer' by the Deka Lash franchisee under the Area Development Agreement?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Franchise Agreement | Summary |
|---|---|---|
| Agreement |
|
|
| n. Franchisor's right to first | 14.6 | Transferee must: - meet our criteria; - execute our then-current Franchise Agreement; - pay any initial franchise fee, as applicable; - satisfactorily complete our initial training program; - obtain necessary licenses and permits; - obtain any lessor approval for transfer; - the transfer must be made in compliance with any laws that apply to the transfer. We have a right of first refusal to match any |
| refusal to acquire franchisee's business | purchase offer for your franchise, any interest in the franchise, or substantially all the assets of the Franchised Business. | |
| o. Franchisor's option to purchase franchisee's business | 15.c. | Upon franchisee's death, we may purchase the business for fair market value. |
| p. Death or disability of franchisee | 15 | Within 90 days of the event, one of the following must be completed: a. Assume and Continue Operations b. Transfer Your Interest to approved Transferee c. Sell to Us d. Cease Operations. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 49–54)
What This Means (2024 FDD)
Based on the 2024 Deka Lash Franchise Disclosure Document, Item 17 outlines the provisions related to transfer of the franchise. However, the provided excerpts focus primarily on the Franchise Agreement rather than the Area Development Agreement. The table summarizes circumstances and conditions related to the transfer of a Deka Lash franchise, including the franchisee's responsibilities and the franchisor's rights.
Specifically, if a Deka Lash franchisee wishes to transfer their franchise, they must execute any transfer, amendment, or release forms required by the franchisor, provide copies of the proposed transfer documents, comply with post-termination provisions, and ensure the prospective transferee receives the current franchise disclosure document. Additionally, the franchisee must pay the Transfer Fee and the Prospect Generation Fee, if applicable. The purchase price and terms of the proposed transfer must not be overly burdensome to the prospective transferee, ensuring the business's future operation is not threatened.
The franchisor also has specific rights and requirements concerning the transfer. The transferee must meet the franchisor's criteria, execute the then-current Franchise Agreement, pay any applicable initial franchise fee, satisfactorily complete the initial training program, obtain necessary licenses and permits, and secure lessor approval for the transfer. Furthermore, Deka Lash has a right of first refusal to match any purchase offer for the franchise, any interest in the franchise, or substantially all the assets of the Franchised Business. This provision allows Deka Lash to maintain control over who enters their franchise system.
In the event of the franchisee's death or disability, specific actions must be taken within 90 days, including assuming and continuing operations, transferring the interest to an approved transferee, selling to the franchisor, or ceasing operations. These stipulations ensure a smooth transition and protect the interests of both the franchisor and the franchisee's estate. However, the FDD excerpts do not specify what constitutes a 'transfer' under the Area Development Agreement, so prospective franchisees should seek clarification from Deka Lash regarding the specific conditions and definitions related to transfers within the context of the Area Development Agreement.