What is the Deka Lash franchisor's obligation regarding the Protected Area?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
ailable. We will approve or disapprove the relocation of your outlet, typically within 14 business days of your submission of the required site selection documents required by us.
Protected Area. There will be a "Protected Area" around your Franchised Business as stated in Schedule 1, Section 3. The area or population included in each Protected Area will vary. The Protected Area is generally a 1.5-mile radius. We reserve the right to vary the size of the Protected Area based on the demographics and development of each market. For example, in densely populated urban areas, the Protected Area may be smaller than a 1.5-mile radius. We may not alter your Protected Area without your consent, even if the population in your Protected Area increases.
Exclusive Territory. Your Protected Area will be an exclusive territory in which we will not establish either a company-owned or franchised outlet selling the same or similar goods or services under the same or similar trademarks or service marks within the Protected Area of your Franchised Business.
Not Exclusive for Marketing. Because marketing efforts are difficult to limit to a specific area (for example, radio and internet do not follow geographic boundaries), your territory is not exclusive for marketing.
Advertising Limits. Your advertising must be primarily focused in your territory unless we agree otherwise in writing. All marketing and advertising, including through other channels of distribution such as the Internet, social media, catalog sales, telemarketing, or other direct marketing must be approved by us, in writing, for each occurrence, in advance. You may accept customers in your Studio who come for services without regard to where they reside.
Required Sales Volume. After two years from the Effective Date of your Franchise Agreement you are required to have minimum Gross Revenue of $15,000 per month in a Territory or a minimum of 75 members in our membership program in a Territory, or we may terminate your Franchise Agreement.
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
will not subsequently choose a location that creates a protective radius that overlaps into the Exclusive Designated Search Area.
Protected Area Temporary Protection. We will not define a Franchise Location or Protected Area until you have an executed lease. However, upon the submission of a fully executed Letter of Intent ("LOI") to us for a proposed location for the Franchised Business that we have approved, we will create a temporary protected radius around said proposed location within which we will not locate any other Franchised Business.
Source: Item 12 — TERRITORY (FDD pages 40–44)
What This Means (2024 FDD)
According to Deka Lash's 2024 Franchise Disclosure Document, a franchisee will have a "Protected Area" around their Franchised Business, as stated in Schedule 1, Section 3 of the franchise agreement. While the area or population size may vary, the Protected Area is generally a 1.5-mile radius. Deka Lash retains the right to adjust the size of the Protected Area based on market demographics and development; however, Deka Lash may not alter your Protected Area without your consent, even if the population in your Protected Area increases.
The Protected Area is an exclusive territory where Deka Lash will not establish either a company-owned or franchised outlet selling the same or similar goods or services under the same or similar trademarks or service marks within the Protected Area of your Franchised Business. However, this exclusivity does not extend to marketing efforts, as these are difficult to limit geographically. Deka Lash also reserves specific rights within a franchisee's protected area, including the right to sell approved products and services through alternative channels of distribution such as the internet, acquire or be acquired by competing systems, develop other business systems using different names or marks, and engage in other activities not expressly prohibited in the Franchise Agreement.
For Area Development Agreements, Deka Lash grants an exclusive territory where they will not locate another Deka Lash Studio operating under the Marks or marks similar to the Marks, whether franchised or affiliate-owned, in your Development Area, provided the franchisee complies with the terms of the Area Development Agreement. However, this does not guarantee the franchisee can open or operate a Franchised Business anywhere within that Development Area. If another franchisee secures a location near the development area, and their associated protective radius (generally 1.5 miles) overlaps into the Development Area, the developer will not be able to locate a studio within the protected radius that overlaps their Development Area. Deka Lash will inform the developer of any existing studios that have protective radius overlapping into their Development Area prior to execution of the agreement, but they make no warranties that a franchisee will not subsequently choose a location that creates a protective radius that overlaps into the Development Area.
It is important to note that Deka Lash will not define a Franchise Location or Protected Area until a franchisee has an executed lease. However, upon submission of a fully executed Letter of Intent ("LOI") for a proposed location that Deka Lash has approved, they will create a temporary protected radius around the proposed location within which they will not locate any other Franchised Business. This protected radius is granted for up to 60 days to allow the franchisee to finalize a lease. Once the lease is approved, fully executed, and submitted, Deka Lash will define the Franchise Location and associated Protected Area in Schedule 1 to the Franchise Agreement, superseding the temporary protected radius.