Does Deka Lash have to provide a cure period for all terminations?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
written notice to Developer, upon the occurrence of any of the following events:
- a) Cease to Actively Engage. If Developer ceases to actively engage in development activities in the Development Area or otherwise abandons its development business for three (3) consecutive months, or any shorter period that indicates an intent by Developer to discontinue development of the Franchised Businesses within the Development Area;
- b) Insolvency. If Developer becomes insolvent, meaning unable to pay bills in the ordinary course of business as they become due;
- c) Failure to Meet Development Schedule. If Developer fails to meet its development obligations under the Development Schedule for any Development Period, and fails to cure such default within 30 days of receiving notice thereof; and
- d) Termination of Associated Franchise Agreement(s). If any Franchise Agreement that is entered into in order to fulfill Developer's development obligations under this Agreement is terminated or subject to termination by Franchisor, pursuant to the terms of that Franchise Agreement.
Upon termination of this Agreement, Franchisor may establish or license others to establish Deka Lash units and operations within the previously reserved Development Area without limitation or restriction.
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to the 2024 Deka Lash Franchise Disclosure Document, Deka Lash is not required to provide an opportunity to cure all defaults before terminating a Development Agreement. Deka Lash can terminate the Development Agreement without providing an opportunity to cure if the developer ceases to actively engage in development activities in the Development Area, abandons its development business for three consecutive months (or any shorter period indicating an intent to discontinue development), or becomes insolvent, meaning unable to pay bills in the ordinary course of business as they become due.
However, if the developer fails to meet its development obligations under the Development Schedule for any Development Period, Deka Lash must provide the developer with 30 days' notice to cure the default. Additionally, if any Franchise Agreement entered into to fulfill the developer's obligations is terminated or subject to termination by Deka Lash, this can also lead to the termination of the Development Agreement.
These termination conditions are important for prospective developers to consider, as they outline specific circumstances under which Deka Lash can terminate the agreement without allowing the developer to rectify the situation. This could have significant financial implications for the developer, especially if they have already invested time and resources into the development project. Therefore, understanding these conditions is crucial for assessing the risks associated with entering into a Development Agreement with Deka Lash.