What is the 'Development Schedule' for a Deka Lash franchise, and where is it found?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
WHEREAS, we grant qualified third parties the right to develop a certain number of Franchised Businesses within a defined geographical area (the "Development Area") in accordance with a mandatory development schedule that must be strictly adhered to, with each Franchised Business within the Development Area being opened and operated utilizing the Marks and System pursuant to the terms and conditions set forth in our then-current form of franchise agreement (each, a "Franchise Agreement").
b) Delayed Opening Fee Assessed (for up to 12 months). For each month you are behind on your Development Schedule (Extension with Release excluded), you will be charged a Delayed Opening Fee of $500 for each studio when that studio becomes due. For example, if you have 3 undeveloped units behind schedule, your Delayed Opening Fee will be $1,500 per month. This Development Schedule Extension Fee must be paid to us with our then-current royalty collections process. For each month this is paid, your development schedule for each of those unit rights will be extended by one month. We will allow you to pay a Delayed Opening Fee for up to 12 months.
c) Loss of Protected Territory. If at any point you (a) do not pay your delayed opening fee, (b) stop or refute our ability to ACH this transaction, (c) notify us, in writing, that you no longer want to be charged the delayed opening fees, or (d) after a period of 12 months of paying the delayed opening fee, you will immediately lose your protected territory rights.
c) Failure to Meet Development Schedule. If Developer fails to meet its development obligations under the Development Schedule for any Development Period, and fails to cure such default within 30 days of receiving notice thereof; and
d) Termination of Associated Franchise Agreement(s). If any Franchise Agreement that is entered into in order to fulfill Developer's development obligations under this Agreement is terminated or subject to termination by Franchisor, pursuant to the terms of that Franchise Agreement.
Upon termination of this Agreement, Franchisor may establish or license others to establish Deka Lash units and operations within the previously reserved Development Area without limitation or restriction. In addition, Developer's right to open and operate any of the remaining Franchises that have not yet opened for business in the Development Area is revoked and terminated.
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to the 2024 Deka Lash Franchise Disclosure Document, the document refers to a 'Development Schedule' for franchisees who enter into an agreement to develop multiple franchise locations. The Development Schedule is mandatory and requires strict adherence. The specific details of the Development Schedule itself are not outlined in the provided excerpts, but the FDD does mention some implications for failing to meet the schedule.
If a Deka Lash developer fails to meet their development obligations under the Development Schedule for any Development Period, and fails to correct this within 30 days of receiving notice, it constitutes a default. Additionally, if any Franchise Agreement entered into to fulfill the developer's obligations is terminated or subject to termination by Deka Lash, it also impacts the Development Schedule. Upon termination of the Development Agreement, Deka Lash can establish or license others to establish Deka Lash units within the previously reserved Development Area without restrictions, and the developer's right to open and operate any remaining franchises that have not yet opened is revoked.
Furthermore, if a Deka Lash franchisee is behind on their Development Schedule, they may be charged a Delayed Opening Fee of $500 per month for each studio that is behind schedule. This fee can be paid for up to 12 months, extending the development schedule by one month for each month the fee is paid. However, failure to pay the delayed opening fee, stopping the ACH payments, or indicating they no longer want to be charged the fees, or after paying the fee for 12 months, will result in the loss of protected territory rights. Additionally, failure to meet obligations, comply with agreements, or show good faith effort in opening the next scheduled studio can lead to immediate termination of territory and development rights.
Prospective Deka Lash franchisees should carefully review the Development Agreement and Franchise Agreement for the specific terms of the Development Schedule, including the number of units required to be opened and the timeline for opening them. It is also important to understand the consequences of failing to meet the schedule, including the potential for delayed opening fees, loss of protected territory, and termination of the Development Agreement. Franchisees should also inquire about the criteria Deka Lash uses to assess 'good faith effort' in securing and opening studios.