What is the Deka Lash franchisor's obligation regarding the Designated Search Area?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
Non-Exclusive Designated Search Area. Unless specified otherwise, we will provide you with a non-exclusive "Designated Search Area" as defined in Section 1 of Schedule 1 of your Franchise Agreement within which you must locate your Franchised Business.
Exclusive Designated Search Area. If your Designated Search Area contains exclusive rights, such as being part of an Area Development Agreement, we will not license anyone the right to open or operate a Franchised Business that is physically located within that Exclusive Designated Search Area. This does not mean you can open or operate a Franchised Business anywhere within that Exclusive Designated Search Area. If a franchisee secures a location near your Exclusive Designated Search Area, and their associated protective radius (generally 1.5 miles) overlaps into your Exclusive Designated Search Area, you will not be able to locate a studio within the protected radius that overlaps your Exclusive Designated Search Area. We will let you know of any existing studios that have protective radius overlapping into your Exclusive Designated Search Area prior to execution of this agreement, but we make no warranties that a franchisee
Source: Item 12 — TERRITORY (FDD pages 40–44)
What This Means (2024 FDD)
According to the 2024 Deka Lash Franchise Disclosure Document, franchisees are provided with a Designated Search Area, which may or may not be exclusive. If the Designated Search Area is non-exclusive, Deka Lash has no obligation to prevent other franchisees from opening in that area. However, if the Designated Search Area contains exclusive rights, such as being part of an Area Development Agreement, Deka Lash will not license anyone else to open or operate a Deka Lash franchise physically located within that Exclusive Designated Search Area.
Even with an Exclusive Designated Search Area, a Deka Lash franchisee cannot simply open a franchise anywhere within that area. If another franchisee secures a location near the Exclusive Designated Search Area, and their protected radius (typically 1.5 miles) overlaps, the new franchisee will not be able to locate a studio within the overlapping protected radius. Deka Lash states that they will inform franchisees of any existing studios with protective radiuses overlapping into their Exclusive Designated Search Area before the agreement is executed. However, Deka Lash makes no guarantees that a franchisee will not later choose a location that results in such an overlap.
Prospective Deka Lash franchisees should carefully examine Schedule 1 of the Franchise Agreement to determine whether their Designated Search Area is exclusive or non-exclusive. They should also inquire about any existing Deka Lash studios near their search area that could potentially create overlapping protective radiuses. Understanding these territorial limitations is crucial for making an informed investment decision.