What happens if a Deka Lash franchisee breaches the Franchise Agreement?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
that the final Franchised Business is required to be opened and operating under the Development Schedule or b) the date you execute a lease for the final Franchised Business required to be opened and operating under the Development Schedule. Upon expiration or termination of this Agreement for any reason, you will not have any rights within the Development Area other than the territorial rights granted in the franchise agreement executed in connection with any Franchised Businesses that you have opened and commenced operating as of the date this Agreement is terminated or expires.
- 6.2 Termination. Any material violation or breach of any Franchise Agreement or this Agreement will be deemed a material violation of this Agreement and any and all Franchise Agreements between the parties. The non-breaching party will be entitled to enforce the penalties of or to terminate this Agreement or the relevant Franchise Agreement(s) as provided in the relevant Franchise Agreement(s) for enforcement or termination. In addition, Franchisor will have the right, at its option, to terminate this Agreement and all rights granted to Developer hereunder, without affording Developer any opportunity to cure such default, effective upon written notice to Developer, upon the occurrence of any of the following events:
- a) Cease to Actively Engage. If Developer ceases to actively engage in development activities in the Development Area or otherwise abandons its development business for three (3) consecutive months, or any shorter period that indicates an intent by Developer to discontinue development of the Franchised Businesses within the Development Area;
- b) Insolvency. If Developer becomes insolvent, meaning unable to pay bills in the ordinary course of business as they become due;
- c) Failure to Meet Development Schedule. If Developer fails to meet its development obligations under the Development Schedule for any Development Period, and fails to cure such default within 30 days of receiving notice thereof; and
- d) Termination of Associated Franchise Agreement(s).
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to the 2024 Deka Lash Franchise Disclosure Document, a material violation of any Franchise Agreement is considered a material violation of all agreements between the franchisee and Deka Lash. In the event of a breach, the non-breaching party has the right to enforce penalties or terminate the agreement, as outlined in the specific Franchise Agreement.
Specifically, if the franchisee, acting as a developer, fails to meet development obligations under the Development Schedule for any Development Period, and does not correct this within 30 days of receiving notice, Deka Lash has the option to terminate the agreement. Deka Lash can also terminate the agreement if any associated Franchise Agreement is terminated or subject to termination based on its terms. These terminations are effective immediately upon written notice without an opportunity to cure the default if the Developer ceases to actively engage in development activities for a period of three consecutive months, becomes insolvent, or if any associated Franchise Agreement is terminated.
Upon termination, Deka Lash can establish or license others to establish Deka Lash units within the previously reserved Development Area without any restrictions. The franchisee's right to open and operate any remaining franchises that have not yet opened for business in the Development Area is revoked. This means the franchisee loses the right to develop additional Deka Lash units unless a Franchise Agreement is already in effect at the time of termination.