What rights does Deka Lash have in the Development Area after a franchisee's exclusivity is terminated?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
ourse 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. In addition, Developer's right to open and operate any of the remaining Franchises that have not yet opened for business in the Development Area is revoked and terminated. This means that Developer will have no further right to construct, equip, own, open or operate additional Deka Lash units which are not, at the time of termination or expiration, the subject of a then-existing Franchise Agreement between Franchisor and Developer which is in full force and effect.
7.
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to the 2024 Deka Lash Franchise Disclosure Document, if a developer's Area Development Agreement is terminated, Deka Lash has the right to develop the area on its own or through third parties. The franchisee retains rights to any open studios, including territorial rights in the Franchise Agreement, unless the Area Development Agreement was terminated due to failure to comply with the terms of existing Franchise Agreements. However, the franchisee's rights to any franchised studios without a Franchise Agreement and exclusivity in the Development Area terminate immediately.
Specifically, if the Developer fails to meet the development obligations under the Development Schedule for any Development Period and does not cure the default within 30 days of receiving notice, or if any Franchise Agreement is terminated, Deka Lash can establish or license others to establish Deka Lash units within the previously reserved Development Area without any limitations. The developer's right to open and operate any remaining franchises that have not yet opened for business in the Development Area is revoked.
This means the developer loses the right to construct, equip, own, open, or operate additional Deka Lash units that are not already subject to a then-existing Franchise Agreement in full force and effect. This clause ensures that Deka Lash can continue to expand its brand presence even if a developer fails to meet their obligations, which is a common provision in area development agreements to protect the franchisor's interests and growth strategy.