What security is required for Deka Lash financing?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
| Item Financed | Initial Franchise Fee for any additional unit rights acquired after 24 months of signing of a Franchise Agreement |
|---|---|
| Source of Financing | Us |
| Down Payment | 50% |
| Amount Financed | 50% |
| Interest Rate | 10% Annual Percentage Rate (A.P.R.) |
| Period of Repayment | 60 months |
| Monthly Payment | $ 404 per month on a $19,000 loan |
| Security Required | Personal Guaranty |
| Whether a Person Other than the Franchisee Must Personally Guarantee the Debt | If the franchisee is an entity, the owners of the franchisee entity must personally guarantee the debt |
| Prepayment Penalty | None |
| Liability Upon Default | Termination of Franchise Agreement; you must pay entire amount due, our attorney fees, and court costs in collecting debt. |
| Waiver of Defenses or Other Legal Right on Default | Waiver of right to jury trial; homestead and other exemptions; waiver of presentment, demand, protest, notice of dishonor. |
Source: Item 10 — FINANCING (FDD pages 31–32)
What This Means (2024 FDD)
According to Deka Lash's 2024 Franchise Disclosure Document, if Deka Lash offers financing for the initial franchise fee for additional unit rights acquired after 24 months of signing the Franchise Agreement, the security required is a personal guaranty. This means that the franchisee is personally responsible for the debt. If the franchisee is a business entity, the owners of the entity must personally guarantee the debt.
This requirement is a fairly standard practice in franchising, as it provides the franchisor with additional assurance that the debt will be repaid. A personal guarantee means that the franchisee's personal assets could be at risk if the business fails to repay the loan. The document specifies that upon default, Deka Lash can terminate the Franchise Agreement, and the franchisee is liable for the entire amount due, including attorney fees and court costs incurred in collecting the debt.
Furthermore, the franchisee waives certain legal rights upon default, including the right to a jury trial, homestead and other exemptions, and the right to presentment, demand, protest, and notice of dishonor. This is a significant point for prospective franchisees to consider, as it limits their legal recourse in the event of a dispute or default. Deka Lash does not guarantee a franchisee's notes, leases, or obligations and does not intend to sell, assign, or discount any notes to third parties.
It is important to note that Deka Lash does not offer direct or indirect financing until a franchisee has been in operation for at least 24 months. Any financing offered is contingent upon the availability of funds and the franchisee's creditworthiness. The financing terms listed in the table, such as the 10% annual interest rate and the $404 monthly payment on a $19,000 loan over 60 months, apply specifically to the financing of the initial franchise fee for additional units, not the initial franchise fee for the first unit.