Can Deka Lash terminate the Area Development Agreement for cause?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in Area Developme nt Agreement | Summary | |
|---|---|---|---|
| f. Termination by franchisor | 6.2 | We may terminate the Area Development | |
| with cause | Agreement for cause. | ||
| g. | "Cause" defined – curable defaults | 6.2 | We may terminate the Area Development Agreement if you fail to meet your development obligations under the mandatory development Schedule and fail to cure the default within a 30-day cure period. This cure period will only be offered once during the term of your Area Development Agreement. |
| h. | "Cause" defined – non- curable defaults | 6.2 | We may terminate the Area Development Agreement if: (i) abandonment; (ii) insolvency; (iii) if you fail to meet your development obligations under the Development Schedule for any Development Period, and fail to cure such default within 30 days of receiving notice thereof; and (iv) if any Franchise Agreement that is entered into in order to fulfill your development obligations under this Agreement is terminated. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 49–54)
What This Means (2024 FDD)
According to Deka Lash's 2024 Franchise Disclosure Document, Deka Lash can terminate the Area Development Agreement for cause, as detailed in Section 6.2 of the agreement.
The FDD specifies two categories of cause for termination: curable defaults and non-curable defaults. A curable default involves failing to meet development obligations under the mandatory development schedule. In this case, Deka Lash must provide a 30-day cure period, which is offered only once during the term of the Area Development Agreement.
Non-curable defaults that could lead to termination include abandonment, insolvency, failing to meet development obligations for any Development Period without curing the default within 30 days of notice, and the termination of any Franchise Agreement entered into to fulfill development obligations. Therefore, a prospective Deka Lash area developer should understand the development schedule and ensure sufficient capital and operational capabilities to meet the obligations and avoid potential termination.