Is Deka Lash obligated to maintain the Brand Fund in a separate bank account?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
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ITEM 6 OTHER FEES
| Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty (Notes 1 and 2) | 6% of Gross Studio Sales or $600 per month, whichever is greater. After your 1 st year of operations, the minimum Royalty Fee increases to $1,000 per month. | As specified in the operations manual. Currently we collect royalties twice a month on the 5 th day following the end of each semi-monthly period. | |
| Brand | The greater of 3% of Gross Studio Sales or, after the 1 st year of operations, $500 per month. | As specified in the operations manual. Currently we collect royalties twice a month on the 5 th day following the end of each semi-monthly period. | You are required to contribute the specified Brand Development Fee into the Brand Development Fund (the "Brand Fund"). We are not obligated to maintain the Brand Fund in a separate bank account nor use the entirety of amounts collected within the same calendar year. |
Source: Item 6 — OTHER FEES (FDD pages 15–23)
What This Means (2024 FDD)
According to Deka Lash's 2024 Franchise Disclosure Document, Deka Lash is not obligated to maintain the Brand Fund in a separate bank account. However, Deka Lash will account for collections and expenditures and track the Brand Fund balance separately.
The Brand Fund is supported by the Brand Development Fee, which is the greater of 3% of Gross Studio Sales or, after the 1st year of operations, $500 per month. This fee is collected twice a month on the 5th day following the end of each semi-monthly period, as specified in the operations manual.
While Deka Lash is not required to keep the Brand Fund in a separate account, they do commit to tracking the collections, expenditures, and balance of the fund. This provides a degree of transparency, allowing franchisees to see how the money is being managed even if it's not in a segregated account. A prospective franchisee should consider the implications of this arrangement and how it might affect the use and oversight of the Brand Fund.