Under what circumstances must a Deka Lash franchisee reimburse Deka Lash's legal fees and costs?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
| Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Prospect | The actual cost | Prior to us giving | In the event you decide to sell |
| Generation | incurred by us, including commissions and fees charged by business brokers in cases where the buyer is identified through such broker. | consent to transfer your operating studio. | your operating studio to a prospective franchisee that comes from a lead generated through us (including broker networks, consultants, and referral sources used by us) you will be required to pay us a Prospect Generation Fee to reimburse us for our associated expenses before we will consent to the transfer of the operating studio to such a buyer. This fee is in addition to the Transfer Fee. |
| Fee | |||
| Legal Fees and Costs | Actual amount of attorney fees and costs incurred. | When incurred. | You must reimburse our attorney fees and costs for all expenses reasonably incurred (i) to enforce the terms of your Franchise Agreement or any obligation owed to us and our affiliates, whether or not we initiate the legal proceeding, unless we initiate and fail to substantially prevail in such court or formal legal proceeding; (ii) in the defense of any claim Franchisee asserts against us on which we substantially prevail in court or other formal legal proceedings; and (iii) as to any disputes that originate between you and any client, vendor, or other third-party affiliate of yours. |
Source: Item 6 — OTHER FEES (FDD pages 15–23)
What This Means (2024 FDD)
According to Deka Lash's 2024 Franchise Disclosure Document, a franchisee may be required to reimburse Deka Lash for legal fees and costs in specific situations.
A Deka Lash franchisee must reimburse Deka Lash's attorney fees and costs for all expenses reasonably incurred (i) to enforce the terms of the Franchise Agreement or any obligation owed to Deka Lash and its affiliates, regardless of whether Deka Lash initiates the legal proceeding, unless Deka Lash initiates and fails to substantially prevail in such court or formal legal proceeding; (ii) in the defense of any claim the franchisee asserts against Deka Lash on which Deka Lash substantially prevails in court or other formal legal proceedings; and (iii) as to any disputes that originate between the franchisee and any client, vendor, or other third-party affiliate of the franchisee.
This means that if Deka Lash has to take legal action to enforce the franchise agreement because of something the franchisee did, the franchisee will have to cover Deka Lash's legal bills. However, if Deka Lash starts a legal case and loses, they can't make the franchisee pay their legal costs. Also, if the franchisee sues Deka Lash and Deka Lash wins in court, the franchisee will be responsible for Deka Lash's legal fees. Finally, franchisees may have to cover legal costs for disputes between the franchisee and their clients, vendors, or other third-party affiliates.
This is a fairly standard clause in franchise agreements. It's designed to protect the franchisor from incurring legal expenses due to the franchisee's actions or disputes. Prospective franchisees should understand that they could be responsible for significant legal costs if they violate the franchise agreement or get into legal battles with Deka Lash or related parties and Deka Lash prevails.