Does Deka Lash provide material benefits to franchisees based on their use of particular suppliers?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
We do not provide material benefits to you based on your use of a particular supplier. However, when your franchise is up for renewal, to continue your franchise rights, we require you to be in compliance with your franchise agreement, which includes compliance with any supplier standards that are contained in our Operations Manual.
We negotiate purchase arrangements with suppliers, including price terms, for the benefit of our franchisees.
We do not maintain written criteria for approving suppliers and thus these criteria are not available to you or your proposed supplier. We do permit you to contract with alternative suppliers and vendors, including marketing and technology vendors, if approved by us in writing and they meet our criteria. If you desire to purchase products or services other than those provided by our approved suppliers or vendors, you may submit to us a written request for approval of the proposed suppliers, products or services. We may charge you for the reasonable expenses and costs we incur to test and approve these suppliers, products, or services. We will examine the quality of the items and the supplier's ability to supply a sufficient quantity in a timely way with good customer service to determine whether to consider adding the supplier to our list of approved
In our last fiscal year ending December 31, 2023, we earned revenue of $999,433 from required purchases or leases by franchisees, representing 10.6% of our total revenue of $9,415,576.
In addition, our last fiscal year ending December 31, 2023, our affiliate DL Products, LLC earned revenue of $3,162,933 selling eyelash extensions and related products and Deka labeled products to our franchisees, representing 33.6% of total revenue.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 27–30)
What This Means (2024 FDD)
According to Deka Lash's 2024 Franchise Disclosure Document, Deka Lash does not provide material benefits to franchisees based on their use of particular suppliers. However, compliance with supplier standards outlined in the Operations Manual is a condition for franchise renewal, meaning that franchisees must adhere to the specified suppliers and standards to maintain their franchise rights. This requirement ensures consistency and quality control across all Deka Lash locations.
Despite not offering direct material benefits, Deka Lash negotiates purchase arrangements with suppliers, including price terms, for the benefit of its franchisees. This suggests that Deka Lash aims to leverage its collective buying power to secure favorable pricing for franchisees, which can indirectly benefit them by reducing their costs.
While franchisees are generally required to use designated suppliers for many essential goods and services, Deka Lash does allow franchisees to seek approval for alternative suppliers. However, Deka Lash does not maintain written criteria for approving alternative suppliers. The franchisee may be charged for the expenses Deka Lash incurs to test and approve these alternative suppliers, products, or services. This provides some flexibility but also introduces a potential cost and administrative hurdle for franchisees who wish to explore options outside of the approved supplier network.
It is important to note that Deka Lash and its affiliate, DL Products, LLC, derive revenue from franchisee purchases. In the fiscal year ending December 31, 2023, Deka Lash earned $999,433 from required purchases or leases by franchisees, representing 10.6% of its total revenue. Additionally, DL Products, LLC earned $3,162,933 from selling eyelash extensions and related products to franchisees, representing 33.6% of its total revenue. This financial relationship highlights the importance of supplier relationships to Deka Lash's overall business model and revenue streams.