For Deka Lash, how long will unit rights be extended when a Delayed Opening Fee is paid?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
dates by 6 months. Pursuant to COMAR 02.02.08.16L, the general release required as a condition of sale, or transfer, shall not apply to any liability under the Maryland Franchise Registration and Disclosure Law.
- b) Delayed Opening Fee Assessed (for up to 12 months). For each month you are behind on your Development Schedule (Extension with Release excluded), you will be charged a Delayed Opening Fee of $500 for each territory when that territory is due. This Development Schedule Extension Fee must be paid to us with our then-current royalty collections process. For each month this is paid, your development schedule for each of
- those unit rights will be extended by one month. We will allow you to pay a Delayed Opening Fee for up to 12 months.
- c) Loss of Protected Territory and Transferability. 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 t
Source: Item 12 — TERRITORY (FDD pages 40–44)
What This Means (2024 FDD)
According to Deka Lash's 2024 Franchise Disclosure Document, a franchisee's development schedule for each of their unit rights will be extended by one month for each month a Delayed Opening Fee is paid. Deka Lash allows franchisees to pay this fee for up to 12 months.
This means that if a Deka Lash franchisee is behind on their development schedule, they have the option to pay a fee of $500 per territory per month to extend their development schedule. This provides some flexibility for franchisees who may be facing unforeseen delays in opening their studios.
However, there are conditions and limitations. If the franchisee fails to pay the delayed opening fee, stops the payment process, or notifies Deka Lash that they no longer want to be charged the fees, they will immediately lose their protected territory rights and transferability rights. Additionally, after 12 months of paying the delayed opening fee, the franchisee will also lose these rights. This creates a financial incentive for franchisees to stay on track with their development schedule while providing a limited safety net if delays occur.
Deka Lash also retains the right to approve the studio location(s) even when the Delayed Opening Fee is being paid. This ensures that Deka Lash maintains control over site selection, regardless of whether a franchisee is utilizing the extension option. This is a fairly common practice in franchising, as the franchisor typically wants to ensure that all locations meet certain criteria to maintain brand consistency and maximize the potential for success.