What must Deka Lash do after receiving a check for franchise fees from a franchisee?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
VIRGINIA ADDENDUM TO THE FRANCHISE AGREEMENT
If any of the terms of the Franchise Agreement are inconsistent with the terms below, the terms below control
The Franchise Agreement is modified to also provide:
Escrow Account:
Due to our financial condition, the Virginia State Corporation Commission's Division of Securities and Retail Franchising requires us to establish an escrow account for all initial franchise fees that we charge. You shall make your check for franchise fees or other payments to the depository (Truist Bank) and send the check to us. Within two business days of our receipt of the check, we will deposit the check into an escrow account that we have established with Truist.Bank.
When we complete all of our pre-opening obligations to you (listed in Item 11 of this Disclosure Document), we will request that you affirm, in writing, that we have completed those obligations and that you assent to release of the funds held in escrow. After receipt of authorization from the Commission, the depository shall release the funds held in escrow by the depository to us to be applied to your account with us.
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to the 2024 Deka Lash Franchise Disclosure Document, if a franchisee is located in Virginia, Deka Lash is required to deposit the franchise fee check into an escrow account within two business days of receipt. This requirement is due to Deka Lash's financial condition, as mandated by the Virginia State Corporation Commission's Division of Securities and Retail Franchising.
The franchisee must make the check payable to Truist Bank (the depository) and send it to Deka Lash. Once Deka Lash fulfills its pre-opening obligations, as outlined in Item 11 of the FDD, Deka Lash will request the franchisee to confirm in writing that these obligations have been met and that the funds can be released from escrow.
After receiving authorization from the Commission, Truist Bank will release the funds from the escrow account to Deka Lash, which will then be applied to the franchisee's account. This process ensures that the franchisee's initial investment is protected until Deka Lash has met its initial obligations, providing a level of financial security for the franchisee during the early stages of the franchise agreement.