Is the Deka Lash Protected Area an exclusive territory?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
ailable. We will approve or disapprove the relocation of your outlet, typically within 14 business days of your submission of the required site selection documents required by us.
Protected Area. There will be a "Protected Area" around your Franchised Business as stated in Schedule 1, Section 3. The area or population included in each Protected Area will vary. The Protected Area is generally a 1.5-mile radius. We reserve the right to vary the size of the Protected Area based on the demographics and development of each market. For example, in densely populated urban areas, the Protected Area may be smaller than a 1.5-mile radius. We may not alter your Protected Area without your consent, even if the population in your Protected Area increases.
Exclusive Territory. Your Protected Area will be an exclusive territory in which we will not establish either a company-owned or franchised outlet selling the same or similar goods or services under the same or similar trademarks or service marks within the Protected Area of your Franchised Business.
Not Exclusive for Marketing. Because marketing efforts are difficult to limit to a specific area (for example, radio and internet do not follow geographic boundaries), your territory is not exclusive for marketing.
Advertising Limits. Your advertising must be primarily focused in your territory unless we agree otherwise in writing. All marketing and advertising, including through other channels of distribution such as the Internet, social media, catalog sales, telemarketing, or other direct marketing must be approved by us, in writing, for each occurrence, in advance. You may accept customers in your Studio who come for services without regard to where they reside.
Required Sales Volume. After two years from the Effective Date of your Franchise Agreement you are required to have minimum Gross Revenue of $15,000 per month in a Territory or a minimum of 75 members in our membership program in a Territory, or we may terminate your Franchise Agreement.
Non-Exclusive Designated Search Area. Unless specified otherwise, we will provide you with a non-exclusive "Designated Search Area" as defined in Section 1 of Schedule 1 of your Franchise Agreement within which you must locate your Franchised Business.
Exclusive Designated Search Area. If your Designated Search Area contains exclusive rights, such as being part of an Area Development Agreement, we will not license anyone the right to open or operate a Franchised Business that is physically located within that Exclusive Designated Search Area. This does not mean you can open or operate a Franchised Business anywhere within that Exclusive Designated Search Area. If a franchisee secures a location near your Exclusive Designated Search Area, and their associated protective radius (generally 1.5 miles) overlaps into your Exclusive Designated Search Area, you will not be able to locate a studio within the protected radius that overlaps your Exclusive Designated Search Area. We will let you know of any existing studios that have protective radius overlapping into your Exclusive Designated Search Area prior to execution of this agreement, but we make no warranties that a franchisee
will not subsequently choose a location that creates a protective radius that overlaps into the Exclusive Designated Search Area.
Protected Area Temporary Protection. We will not define a Franchise Location or Protected Area until you have an executed lease. However, upon the submission of a fully executed Letter of Intent ("LOI") to us for a proposed location for the Franchised Business that we have approved, we will create a temporary protected radius around said proposed location within which we will not locate any other Franchised Business. We will grant this protected radius for a period of up to 60 days to allow you to negotiate and finalize a lease for the proposed location. While you may have multiple fully executed LOIs, we will only grant a protected radius around one of the proposed locations you designate. This designation shall be made to us in writing, accompanied by the associated signed LOI, and we have up to 5 business days to accept such designation.
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 Protected Area is considered an exclusive territory, meaning that Deka Lash will not establish another company-owned or franchised outlet selling similar goods or services under the same trademarks within that Protected Area. The Protected Area is generally a 1.5-mile radius around the Franchised Business location, but Deka Lash reserves the right to adjust the size based on market demographics and development. Deka Lash will not alter the Protected Area without the franchisee's consent, even if the population increases. However, this exclusivity does not extend to marketing efforts due to the broad reach of channels like radio and the internet.
For franchisees entering into an Area Development Agreement, Deka Lash grants an exclusive territory within the Development Area, preventing the establishment of another Deka Lash Studio operating under similar marks, whether franchised or affiliate-owned. However, this exclusivity is subject to certain limitations. The franchisee cannot open or operate a Franchised Business anywhere within that Development Area. If another franchisee secures a location nearby, and their protective radius (generally 1.5 miles) overlaps into the Development Area, the franchisee will not be able to locate a studio within the overlapping protected radius. Deka Lash will inform the franchisee of any existing studios with protective radii overlapping into the Development Area before the agreement is executed, but makes no guarantees about future locations chosen by other franchisees.
It's important to note that Deka Lash reserves certain rights within the Protected Area. They can sell approved products and services through alternative channels of distribution, including the internet, without compensating the franchisee for orders solicited or accepted within their territory. Deka Lash also reserves the right to acquire or be acquired by any competing system or other third party, even if that system has units within the Protected Area. Additionally, Deka Lash can develop other business systems using different names or marks and grant licenses to use those systems.
Franchisees should also be aware that their territorial exclusivity under an Area Development Agreement is not contingent upon meeting sales volumes, market penetration, or other performance metrics. However, failure to meet the development schedule outlined in the Area Development Agreement can result in the loss of rights to the undeveloped portion of the development area. Furthermore, if a franchisee is not current on their obligations, not in compliance with their agreements, or not showing a good faith effort to secure and open their next scheduled studio, their territory and remaining development rights can be immediately terminated.