Does the landlord have to notify the Deka Lash franchisor of tenant defaults?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
- III. During the term of the Lease, Landlord agrees to give Franchisor written notice of all defaults of Tenant concurrently with the giving of such notice to Tenant. Landlord
- further agrees to give Franchisor a 10 day period to cure such default, or the period provided to the Tenant in the Lease, whichever period shall be longer.
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to Deka Lash's 2024 Franchise Disclosure Document, the landlord is required to provide written notice to Deka Lash (the franchisor) of any tenant defaults. This notice must be given concurrently with the notice provided to the tenant (the franchisee). Furthermore, the landlord must allow Deka Lash a period of 10 days, or the period provided to the tenant in the lease, whichever is longer, to cure the default.
This requirement is outlined in an agreement between the landlord, tenant (franchisee), and Deka Lash, designed to protect Deka Lash's interest in the leased premises. This agreement ensures that Deka Lash is informed of any issues that could jeopardize the franchisee's ability to operate the Deka Lash business at the location. The franchisor's right, but not obligation, to cure defaults gives Deka Lash some control over maintaining the lease and the location for another franchisee, if necessary.
This arrangement is beneficial for a prospective Deka Lash franchisee because it provides an additional layer of security. If the franchisee faces difficulties in meeting lease obligations, Deka Lash has the opportunity to step in and resolve the issue, potentially preventing eviction and business disruption. However, it is important to note that Deka Lash is not obligated to cure any default, and its decision to do so is at its sole discretion. Franchisees should still focus on maintaining a strong financial position and fulfilling their lease obligations to avoid defaults in the first place.
This type of three-party agreement is not uncommon in franchising, especially for businesses that rely heavily on location. It allows the franchisor to maintain brand consistency and operational control, while also providing some support to franchisees in managing their lease obligations. Prospective franchisees should carefully review the lease agreement and related addenda to fully understand their rights and responsibilities, as well as the franchisor's role in the leasing process.