What are the minimum Gross Revenue or membership requirements for a Deka Lash franchise after two years?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
e (12) months after you execute this Agreement, regardless of when you actually open. If this agreement is signed as the second or subsequent unit in an Area Development Agreement, royalties begin the date you sell your first paid product, service, or membership ("Location Start Date").
- b) Royalty Amount. From the time of your Royalty Start Date until the end of
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to the 2024 Deka Lash Franchise Disclosure Document, after the second year of operations, franchisees are subject to a minimum royalty fee. This fee is calculated as the greater of 6% of all Gross Revenue or $1,000 per month. This means that even if a Deka Lash franchise location has low gross revenues, the franchisee must still pay a minimum royalty of $1,000 for that month.
This royalty structure has significant implications for franchisees. In months where 6% of gross revenue is less than $1,000, the franchisee effectively pays a higher percentage in royalties. This could impact profitability, especially in the early stages of the business or during slower months. Franchisees need to carefully project their revenue and manage expenses to ensure they can meet this minimum royalty obligation.
It is important to note that "Gross Revenue" is not defined in the provided excerpts, so prospective franchisees should seek clarification from Deka Lash regarding what constitutes Gross Revenue for royalty calculation purposes. Understanding this definition is crucial for accurate financial planning and forecasting. Franchisees should also inquire about any potential changes to the royalty structure in future agreements.