What is the duration of the development schedule extension that Deka Lash may grant?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
Area Development Schedule Extension & Fees. In the event that you fail to meet your Area Development obligations under your Area Development Agreement, and you are (a) current on your obligations owed to us, (b) in compliance with your franchise agreement(s) and (c) showing a good faith effort in trying secure and open your next scheduled studio, then following will occur:
- a) Extension with Release (6 months). Per written notice to us and execution of a general release in our favor, we will grant you a one-time, six-month extension to your development schedule with no Delayed Opening Fee. This six-month extension can only be used once during your development agreement and delays all subsequent development dates by 6 months. Pursuant to COMAR 02.02.08.16L, the general release required as a condition of sale, or transfer, shall not apply to any liability under the Maryland Franchise Registration and Disclosure Law.
- 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 territory when that territory is due. 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 and Transferability. 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 t
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 who fails to meet their development obligations may be eligible for extensions under certain conditions. Deka Lash may grant a one-time, six-month extension to the development schedule if the developer is current on their obligations, in compliance with their franchise agreements, and demonstrating a good faith effort to secure and open their next scheduled studio. This six-month extension delays all subsequent development dates by six months and requires the execution of a general release in Deka Lash's favor.
In addition to the one-time six-month extension, Deka Lash offers another option to extend the development schedule by paying a Delayed Opening Fee. For each month the Area Developer is behind schedule (excluding the six-month extension period), they will be charged $500 for each territory due. This fee extends the development schedule by one month for each unit right, and Deka Lash allows this fee to be paid for up to 12 months.
It's important to note that these extensions are not indefinite. If the Area Developer fails to pay the delayed opening fee, stops the ACH payments, or notifies Deka Lash in writing that they no longer want to be charged the fees, they will immediately lose their protected territory rights and transferability rights. Additionally, after 12 months of paying the delayed opening fee, the Area Developer will also lose these rights. Deka Lash also retains the right to approve the studio locations.