If a Deka Lash franchisee's business is judicially determined to be insolvent, can the franchise agreement be terminated?

According to the 2024 Deka Lash Franchise Disclosure Document, if a Deka Lash developer becomes insolvent, meaning they are unable to pay bills in the ordinary course of business as they become due, Deka Lash has the right to terminate the Development Agreement. This termination is at Deka Lash's option and is effective immediately upon written notice to the developer, without providing an opportunity to cure the default.

This clause is significant for potential Deka Lash developers as it highlights the financial risks associated with the agreement. Insolvency can trigger immediate termination, potentially leading to a loss of development rights and any investments made. The franchisee should carefully consider their financial stability and ability to manage cash flow to avoid such a situation.

It is important to note that this termination clause applies specifically to the Development Agreement, which grants rights to develop multiple franchise locations. The FDD does not explicitly state whether a similar clause exists within the standard Franchise Agreement for a single Deka Lash unit. Therefore, prospective franchisees should clarify with Deka Lash whether a similar insolvency clause applies to individual franchise agreements and under what specific conditions a franchise agreement might be terminated due to financial difficulties.