What are the payment terms if Deka Lash purchases the franchise after the appraisers' decision?

According to the 2024 Deka Lash Franchise Disclosure Document, if Deka Lash chooses to purchase the franchise after an appraisal, the payment terms are structured as follows: Deka Lash will pay ten percent of the purchase price upon signing the contract. The remaining balance will be paid out in sixty equal monthly installments of principal, with interest calculated at the prime rate published by the franchisee's principal bank at the time of each monthly principal payment.

This arrangement provides a structured payment plan if Deka Lash decides to buy back the franchise. The initial 10% payment provides immediate capital, while the remaining balance is paid over five years (60 months) with interest. This could be beneficial to the franchisee's estate or the franchisee if permanently incapacitated, as it provides a steady income stream over time.

However, the interest rate is tied to the prime rate at the franchisee's principal bank, which means the actual interest paid could fluctuate over the five-year payment period depending on market conditions. Prospective franchisees should consider this variable interest rate when evaluating the financial implications of this buy-back option. It is also important to note that the appraisers are not allowed to include a factor for the "goodwill" or "going concern" value of the franchise, which could affect the overall purchase price.