If a Deka Lash developer fails to pay the delayed opening fee, what is the consequence?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
| Гоо | Amount | Duo Dete | Domarka |
|---|---|---|---|
| Fee | Amount | Due Date | Remarks |
| Transfer Fee | $10,000 (complete transfer or transfer or transfer of a majority interest) per transaction. Selling franchisee is responsible for all applicable broker fees. | At the time you transfer the franchise or a majority ownership in it. | Transferee must be approved by us and you must be in compliance with your Franchise Agreement. No fee if transferred from individual to business entity owned by the same owners with the same ownership percentages. If deemed necessary, we can revise the transfer fee once a calendar year with a 30 days' |
| Audit Fee | Cost of the audit plus any shortfall amount found to be due. | On demand. | notice. Payable if audit discloses an underpayment of royalty or fee by 2% of more. |
| Opening Deadline Extension Fee | $500 per month (or portion of month) for which the deadline is extended. | Automatically begins on the first date of default, unless a lease is executed. | Payable for each month that you are granted an extension beyond the 365 days allowed in your franchise agreement, for up to 12 months. |
| Development | $500 per month per territory according to each territory's development deadline. | At time of extension to development schedule. | If at any point you (a) do not pay your delayed opening fee, (b) stop or refute our ability to ACH this transaction, (c) notify us, in writing, that you no longer want to be charged the delayed opening fees, or (d) after a period of 12 months of paying the delayed opening fee, you will immediately lose your protected territory rights and all accompanying transferability rights therein. |
| Delay Fees | |||
| Interest and | Lesser of 18% annually or the maximum permitted by law. Plus, a $100 Late Fee per occurrence. | Owed on past due amounts. |
Source: Item 12 — TERRITORY (FDD pages 40–44)
What This Means (2024 FDD)
According to Deka Lash's 2024 Franchise Disclosure Document, a developer's failure to pay the delayed opening fee has significant consequences. Specifically, if a developer does not pay the delayed opening fee, or stops the ACH transaction, or notifies Deka Lash in writing that they no longer want to be charged the fee, they will immediately lose their protected territory rights and all accompanying transferability rights. Deka Lash also retains all rights to approve the studio location(s). This policy is in place to ensure developers meet their obligations for opening new studios according to the agreed-upon development schedule.
This policy creates a substantial risk for Deka Lash area developers. Failing to maintain payments for the delayed opening fee, for any reason, results in the immediate loss of protected territory rights. This means Deka Lash could then establish another franchise in what was previously the developer's exclusive area, directly impacting the developer's potential customer base and revenue. The loss of transferability rights further restricts the developer's ability to sell or transfer their rights to another party, reducing the overall value of their investment.
It is important to note that Deka Lash also reserves the right to revise these options at any time. This means the terms and conditions related to delayed opening fees and the associated consequences could change during the term of the Area Development Agreement. Prospective developers should carefully consider these factors and discuss them with Deka Lash to fully understand the potential risks and obligations involved in area development.
In summary, the delayed opening fee policy and its consequences are critical aspects of the Deka Lash Area Development Agreement. Developers must be diligent in meeting their payment obligations to avoid losing their protected territory and transferability rights. The potential for changes to the policy further underscores the need for thorough due diligence and open communication with Deka Lash before entering into an agreement.