If the Deka Lash franchisee is an entity, who must personally guarantee the debt?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
| Item Financed | Initial Franchise Fee for any additional unit rights acquired after 24 months of signing of a Franchise Agreement |
|---|---|
| Source of Financing | Us |
| Down Payment | 50% |
| Amount Financed | 50% |
| Interest Rate | 10% Annual Percentage Rate (A.P.R.) |
| Period of Repayment | 60 months |
| Monthly Payment | $ 404 per month on a $19,000 loan |
| Security Required | Personal Guaranty |
| Whether a Person Other than the Franchisee Must Personally Guarantee the Debt | If the franchisee is an entity, the owners of the franchisee entity must personally guarantee the debt |
Source: Item 10 — FINANCING (FDD pages 31–32)
What This Means (2024 FDD)
According to Deka Lash's 2024 Franchise Disclosure Document, if the franchisee is a business entity, the owners of that entity must personally guarantee the debt. This requirement is part of the financing terms Deka Lash may offer for the Initial Franchise Fee for additional units after a franchisee has been with the company for at least 24 months.
This personal guarantee means that the individual owners are personally liable for the debt, even if the business entity fails to pay. This is a common practice in franchising, as it provides the franchisor with additional security and recourse in case of default. The financing Deka Lash offers covers 50% of the Initial Franchise Fee for additional units, with a 10% annual interest rate and a 60-month repayment period. A loan of $19,000 would result in monthly payments of $404.
In the event of default, Deka Lash can terminate the Franchise Agreement and require the franchisee to pay the entire amount due, including attorney fees and court costs. Additionally, the franchisee waives certain legal rights, such as the right to a jury trial and certain exemptions. This arrangement is designed to protect Deka Lash's financial interests and ensure that franchisees are fully committed to their financial obligations.
Prospective franchisees should carefully consider the implications of a personal guarantee and ensure they understand the risks involved before entering into a franchise agreement with Deka Lash. It is advisable to seek legal and financial advice to fully evaluate the potential liabilities and obligations.