What happens if a Deka Lash tenant defaults on the terms of the Franchise Agreement?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
of Financial Institutions 201 West Washington Avenue, 3rd Floor
Madison, WI 53703
EXHIBIT F-1 FRANCHISOR ADDENDUM; CONDITIONAL ASSIGNMENT OF LEASE
THIS FRANCHISOR ADDENDUM AND CONDITIONAL ASSIGNMENT OF LEASE ("Agreement") is made a part of that certain Lease to which it is attached and is dated of even date therewith. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Lease.
WHEREAS, as a condition to the grant of rights under the Franchise Agreement to Tenant, Franchisor requires that Tenant and Landlord enter into this Agreement by their attachment to the Lease to which it is attached.
NOW, THEREFORE, for and in consideration of the execution of the Lease by Landlord and Tenant and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:
- I. Tenant assigns all of its right, title and interest in and to the Lease and the Premises to Franchisor, effective automatically without further action of Tenant upon notice from Franchisor to Landlord. Although it is the intention of the parties that this Agreement may be effective as a present assignment, it is expressly understood and agreed that until an event described below has occurred and Franchisor has exercised its remedies, Landlord shall look to Tenant for full performance of Tenant's obligations under the Lease. In no event shall Franchisor have any liability, duty, or obligation to Landlord under the Lease or otherwise without Franchisor's written consent in its sole discretion.
- II. With the exception of Sections III, IV, VIII, IX below which are effective as of the date this Agreement is fully executed by the parties, the assignment of Lease contemplated hereunder is conditional and shall not be effective until the "Effective Date," as defined in Section 5 of this Agreement. Franchisor shall have no right to assume the Lease unless and until:
- a. Default by Tenant under the terms of the Lease, which default is not cured by Tenant within the time limits provided therein; or
- b. Default by Tenant under the terms of the Franchise Agreement which defau
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to the 2024 Deka Lash Franchise Disclosure Document, if a franchisee (referred to as 'Tenant' in the context of the lease) defaults on the terms of the Franchise Agreement, several actions can occur. Deka Lash, as the Franchisor, has the right to take action if the franchisee defaults under the terms of the lease or the Franchise Agreement, provided the franchisee fails to correct the default within the specified time limits. Additionally, if the franchisee voluntarily begins any insolvency or bankruptcy proceedings, or if such proceedings are brought against them and not dismissed within 60 days, Deka Lash can take action.
Specifically, Deka Lash can provide notice to the landlord that the franchisee is in default and can then enact the assignment of the lease from the franchisee to Deka Lash. This assignment occurs automatically upon notice from Deka Lash to the landlord, without requiring further action from the franchisee. However, the landlord will continue to look to the franchisee for full performance of the lease obligations until Deka Lash exercises its remedies. Deka Lash does not have any liability, duty, or obligation to the landlord under the lease unless Deka Lash provides written consent.
The landlord is obligated to provide Deka Lash with written notice of all franchisee defaults at the same time such notice is given to the franchisee. This allows Deka Lash to monitor the franchisee's compliance and to prepare for potential intervention if the franchisee fails to meet their obligations. This arrangement protects Deka Lash by ensuring they are informed of any issues that could impact the operation and reputation of the Deka Lash studio. The franchisee assigns all rights to the lease to Deka Lash, but the assignment is conditional until Deka Lash chooses to exercise its rights due to a default or other specified events.