What is the minimum Deka Lash Royalty Fee per month during the first year of operation?

According to Deka Lash's 2024 Franchise Disclosure Document, the Royalty Fee is 6% of Gross Studio Sales or $600 per month, whichever is greater, during the first year of operation. After the first year, the minimum Royalty Fee increases to $1,000 per month.

This means that a new Deka Lash franchisee will pay a royalty fee each month based on their gross sales, but will always pay at least $600. If 6% of their gross sales is less than $600, they will pay the minimum of $600. If their gross sales are high enough that 6% exceeds $600, they will pay the higher amount. After the first year, this minimum increases to $1,000 per month, meaning the franchisee's sales must increase to maintain profitability.

Franchisees should carefully consider their projected sales volume during the first year to understand the potential royalty payments. It's important to note that even if a Deka Lash studio is not performing well, the franchisee is still obligated to pay the minimum royalty fee. This could impact the franchisee's profitability, especially in the early stages of the business.

Deka Lash collects royalties twice a month on the 5th day following the end of each semi-monthly period. Franchisees must be prepared to manage their cash flow to meet these payment obligations. It is also important to note that should a franchisee breach their Franchise Agreement and close their studio, they are still required to pay the minimum royalties for the remaining life of the Franchise Agreement.