When is the initial franchise fee for a Deka Lash franchise considered fully earned and nonrefundable?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
Reserved.** Except as provided in this Section 3 of this Agreement, the parties agree and acknowledge that the rights granted in this Agreement are non-exclusive and that we and our affiliates reserve all other rights not expressly granted to you herein.
4. FEES AND PAYMENTS
- 4.1 Initial Franchise Fee. The initial franchise fee is $59,900. If you purchase additional Franchised Business rights after the signing of your first Franchise Agreement with us, the initial franchise fee is $38,000 per Franchised Business provided the subsequent purchase occurs within five years of signing the first franchise agreement with us and you are current on your obligations to us. If you are acquiring an open and operating Franchised Business, the franchise fee is $19,900. If you fail to open the Franchise within the time limits expressed in the Franchise Agreement, we may terminate the Franchise Agreement and retain the entire Initial Franchise Fee. The initial franchise fee is fully earned and nonrefundable upon your signing of the franchise agreement and receipt of the funds by us.
- 4.2 Franchise Fee Considerations. This Franchise Fee is payment, in part, for expenses incurred by Franchisor, including marketing for franchisee, referral fees and commissions, sales expenses, administrative overhead, return on investment, costs related to the execution of this Agreement, legal, accounting and other professional fees and our lost or deferred opportunity to sell Franchises in your market area to others.
- 4.3 Operations Onboarding & First Studio Opening Support Fee. You must pay to us at the same time as the Initial Franchise Fee, an Operations Onboarding & First Studio Opening Support Fee of $5,450. This fee offsets our costs in supporting you and your operations staff through the onboarding process and supporting your efforts to find and develop your first site. The Operations Onboarding & First Studio Opening Support Fee is fully earned and non-refundable upon your signing of the Franchise Agreement and receipt of the funds by us. For your second and subsequent locations, you are not required to pay this fee.
- 4.4 Non-Refundable Training Fee. Additionally, you must pay to us at the same time as the Initial Franchise Fee, a Non-Refundable Training Fee of $3,750.
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to the 2024 Deka Lash Franchise Disclosure Document, the initial franchise fee becomes fully earned and nonrefundable upon the franchisee signing the franchise agreement and Deka Lash receiving the funds. The initial franchise fee is $59,900, but it is reduced to $38,000 for each additional franchise purchased within five years of the first, assuming the franchisee is current on their obligations. If acquiring an already operating franchise, the fee is $19,900.
In addition to the initial franchise fee, Deka Lash franchisees must also pay an Operations Onboarding & First Studio Opening Support Fee of $5,450 and a Non-Refundable Training Fee of $3,750 at the same time as the initial franchise fee. Similar to the initial franchise fee, these fees are fully earned and non-refundable upon signing the Franchise Agreement and receipt of funds by Deka Lash. The Operations Onboarding & First Studio Opening Support Fee is not required for second and subsequent locations.
It is important to note that these fees are non-refundable under any circumstances once the agreement is executed. This means that even if a franchisee is unable to open their Deka Lash studio, they will not receive a refund of the initial franchise fee, the Operations Onboarding & First Studio Opening Support Fee, or the Non-Refundable Training Fee. Prospective franchisees should carefully consider their ability to meet the obligations of the franchise agreement before signing and paying these fees.
This policy is fairly standard in the franchise industry, as the initial fees are intended to compensate the franchisor for the time and resources expended in evaluating the franchisee, providing initial training and support, and foregoing the opportunity to sell the franchise to someone else. However, the non-refundable nature of these fees underscores the importance of thorough due diligence before investing in a Deka Lash franchise.