Under what condition can Deka Lash change the monthly Technology Fee?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
| 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. However, we will account for collections and expenditures and track the Brand Fund balance separately. |
| Development | |||
| Fee | |||
| Technology Fee | $199 per month per executed franchise agreement from date of signing franchise agreement through the date of opening of the studio. $399 per month per franchise location thereafter. | 5 th day of the month for the preceding month, or as specified in the operations manual. | If deemed necessary, we can change monthly fee once a calendar year with 30 days' notice. Any increase would be limited to cover costs of additional software made ava |
Source: Item 6 — OTHER FEES (FDD pages 15–23)
What This Means (2024 FDD)
According to Deka Lash's 2024 Franchise Disclosure Document, Deka Lash can change the monthly Technology Fee if deemed necessary. This change can only occur once per calendar year, and Deka Lash must provide franchisees with 30 days' notice before the change takes effect. Any increase to the Technology Fee is limited to covering the costs of additional software made available to franchisees.
For a prospective Deka Lash franchisee, this means that the $399 monthly technology fee could increase if Deka Lash introduces new software. However, Deka Lash is restricted to raising the fee only once per year and must justify the increase by linking it to the cost of new software. The 30-day notice period allows franchisees time to adjust their budgets accordingly.
Many franchise systems reserve the right to modify fees during the term of the franchise agreement, but they often include limitations like those described in the Deka Lash FDD. Franchisees should pay close attention to these clauses to understand the potential for increased costs and how those increases are justified. It is important to note that the initial Technology Fee is $199 per month per executed franchise agreement from the date of signing the franchise agreement through the date of opening of the studio, and then it increases to $399 per month per franchise location thereafter.