Can Deka Lash terminate the Area Development Agreement without cause?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in Area Developme nt Agreement | Summary |
|---|---|---|
| e. Termination by franchisor without cause | Not Applicable | Not Applicable. |
| f. Termination by franchisor with cause | 6.2 | We may terminate the Area Development Agreement for cause. |
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 cannot terminate the Area Development Agreement without cause. The FDD outlines specific conditions under which Deka Lash can terminate the Area Development Agreement, all of which involve some form of 'cause.'
The document specifies that Deka Lash may terminate the Area Development Agreement if the franchisee fails to meet their development obligations under the mandatory development schedule and fails to correct this within a 30-day cure period. However, this cure period is only offered once during the term of the Area Development Agreement. Additionally, Deka Lash can terminate the agreement immediately for certain non-curable defaults, such as abandonment or insolvency. Termination can also occur if the franchisee fails to meet development obligations for any Development Period and does not cure the default within 30 days of notice, or if any Franchise Agreement entered into to fulfill development obligations is terminated.
This means that a Deka Lash area developer is afforded some protection against arbitrary termination, as Deka Lash must have a legitimate reason based on the agreement's terms to end the relationship. However, it also places a significant responsibility on the franchisee to meet the development schedule and maintain solvency to avoid termination. Prospective franchisees should carefully review the definitions of 'cause' and the specific obligations outlined in Section 6.2 of the Area Development Agreement to fully understand their responsibilities and potential risks.