What are the two components that determine the Deka Lash Brand Development Fee?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
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ITEM 6 OTHER FEES
| Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty (Notes 1 and 2) | 6% of Gross Studio Sales or $600 per month, whichever is greater. After your 1 st year of operations, the minimum Royalty Fee increases to $1,000 per month. | As specified in the operations manual. Currently we collect royalties twice a month on the 5 th day following the end of each semi-monthly period. | |
| Brand | The greater of 3% of Gross Studio Sales or, after the 1 st year of operations, $500 per month. | As specified in the operations manual. Currently we collect royalties twice a month on the 5 th day following the end of each semi-monthly period. | You are required to contribute the specified Brand Development Fee into the Brand Development Fund (the "Brand Fund"). We are not obligated to maintain the Brand Fund in a separate bank account nor use the entirety of amounts collected within the same calendar year. |
Source: Item 6 — OTHER FEES (FDD pages 15–23)
What This Means (2024 FDD)
According to Deka Lash's 2024 Franchise Disclosure Document, the Brand Development Fee is determined by two components. Until the franchisee's first year of operations, the fee is 3% of Gross Studio Sales or $600 per month, whichever is greater. After the first year of operations, the Brand Development Fee is the greater of 3% of Gross Studio Sales or $500 per month.
The Brand Development Fee is contributed to the Brand Development Fund, also known as the "Brand Fund." Deka Lash is not obligated to maintain the Brand Fund in a separate bank account, nor are they required to use all collected amounts within the same calendar year. However, Deka Lash will account for collections and expenditures and track the Brand Fund balance separately.
Prospective franchisees should note that the Brand Development Fee is a recurring monthly expense. Franchisees should carefully consider these ongoing costs when evaluating the overall financial viability of a Deka Lash franchise. Understanding how the Brand Fund is managed and utilized is also crucial for franchisees to assess the value they receive from these contributions.