Can a Deka Lash franchisee open a Franchised Business anywhere within their Development Area?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
executed the last lease for the required number of franchise locations required to be opened and operating in the specified non-contiguous area, your territorial protections associated with this non-contiguous Development Area will be terminated, and you will not have any rights or protections within the associated non-contiguous section of your Development Area other than the territorial rights granted in connection with any Franchised Businesses that you have opened and commenced operating within this non-contiguous Development Area.
- 1.3 Development Area Restrictions. While we will not license anyone the right to open or operate any Franchised Business that is physically located within the Development Area, this 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 a 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. Speed is of the essence. In a case where multiple franchisees have a similar search area, or search areas near each other, the first franchisee to secure a location and create a protective radius, as defined herein, gets the protective rights of that radius area and the other franchisees must adapt their location search accordingly.
- 1.4 Loss of Territorial Exclusivity in Development Territories. If you fail to meet the mandatory Development Schedule and the Area Development Agreement is terminated, you will retain your rights to any open Studios, including the territorial rights described in the Franchise Agreement for such studio, provided that the Area Development Agreement was not terminated as a result of your failure to comply with the terms of your existing Franchise Agreement(s). However, your rights to any Franchised Studios for which there is no Franchise Agreement and your exclusivity in the Development Area will terminate immediately. Thereafter, we will have the right to develop the Development Area on our own or through third parties.
2. DEVELOPMENT FEE
You must pay to us a development fee in the amount set forth in the Data Sheet attached hereto as Appendix 1 (the "Development Fee") for the right to develop the foregoing Franchised Businesses within the Development Area under this Agreement (subject to the restrictions in section 1 above), which will be due immediately upon execution of this Agreement.
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to Deka Lash's 2024 Franchise Disclosure Document, while a franchisee is granted the right to develop multiple Franchised Businesses within a Development Area, this does not automatically mean they can operate a Franchised Business anywhere within that Development Area. Deka Lash typically requires development areas to be contiguous. If a Development Area has non-contiguous sections, each section is assigned a specific number of franchise locations that must be opened and operating in that particular area. Once the franchisee has executed the last lease for the required number of franchise locations in a non-contiguous area, the territorial protections for that section are terminated.
Moreover, the FDD states that if another franchisee secures a location near the development area, and their protective radius (generally 1.5 miles) overlaps into the Development Area, the franchisee will not be able to locate a studio within the overlapping protected radius. Deka Lash will inform the franchisee of any existing studios with overlapping protective radiuses before the agreement is executed; however, Deka Lash does not guarantee that a new franchisee will not later choose a location that results in an overlap. In cases where multiple franchisees are searching in similar areas, the first to secure a location and establish a protective radius gains those protective rights, and other franchisees must adjust their search accordingly.
If a Deka Lash franchisee fails to meet the mandatory Development Schedule and the Area Development Agreement is terminated, the franchisee will retain rights to any open studios, including the territorial rights outlined in the Franchise Agreement for that studio, provided the Area Development Agreement was not terminated due to a failure to comply with the terms of the existing Franchise Agreement(s). However, the rights to any Franchised Studios for which there is no Franchise Agreement and the exclusivity in the Development Area will terminate immediately. Following this, Deka Lash has the right to develop the Development Area independently or through other third parties.