After the franchise agreement ends, what post-term covenants regarding competition and solicitation must a Deka Lash franchisee adhere to?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
- b) Post-Term.
You will not, for a period of two years after expiration or termination of this Agreement, in the Protected Area or within thirty (30) miles of the boundaries of the Protected Area or another Protected Area franchised by us and in operation at that time, directly or indirectly, for a fee or charge, offer or engage in eyelash extension services.
- 12.2 No Solicitation of Customers.
You will not, for a period of two years after expiration or termination of this Agreement, in the Protected Area or within thirty (30) miles of the boundaries of the Protected Area, directly or indirectly solicit the patronage of any client served by your prior Franchised Business during the last 24 months that you were a franchisee, or such shorter time as you were a franchisee, for the purpose of offering such person or entity, for a fee or charge, eyelash extension services.
- 12.3 Non-Disparagement.
You shall not, at any time during the Term and thereafter, make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage us, our franchisees, or any of its subsidiaries or affiliates or their respective officers, directors, employees, advisors, businesses or reputations.
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to the 2024 Deka Lash Franchise Disclosure Document, after the franchise agreement expires or terminates, a franchisee faces specific restrictions regarding competition and solicitation. For two years following the end of the agreement, the franchisee cannot offer or engage in eyelash extension services for a fee within their Protected Area or within 30 miles of its boundaries. This restriction also applies to areas within 30 miles of another Deka Lash franchise's Protected Area that is in operation at the time of termination or expiration.
In addition to the non-compete clause, Deka Lash franchisees are prohibited from soliciting clients. For a period of two years after the agreement ends, a franchisee cannot solicit the patronage of any client who was served by their former Deka Lash franchise during the last 24 months of operation, or for the entire duration they were a franchisee if it was less than 24 months. This restriction applies within the franchisee's Protected Area and within 30 miles of its boundaries. The purpose of this is to prevent franchisees from taking established customer relationships to a competing business.
These post-term covenants are designed to protect Deka Lash's market share and customer base. The restrictions prevent a former franchisee from directly competing with existing Deka Lash locations or leveraging the goodwill and customer relationships developed during the franchise term. Franchisees should carefully consider these limitations, as they could impact their ability to work in the eyelash extension industry or a related field after leaving the Deka Lash system. It is also important to note that the franchisee must not disparage Deka Lash, its franchisees, or its affiliates at any time during and after the term of the agreement.