Under what condition might Deka Lash offer direct or indirect financing to a franchisee?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
We do not offer direct or indirect financing until you have been a franchisee for at least 24 months. At that time, we may offer financing for the Initial Franchise Fee for any additional units.
Whether we will extend financing, and the amount, will vary depending upon the availability of funds and your creditworthiness.
The following table summarizes the financing we may offer you for the Initial Fees.
| Item Financed | Initial Franchise Fee for any additional unit rights acquired after 24 months of signing of a Franchise Agreement |
|---|---|
| Source of Financing | Us |
| Down Payment | 50% |
| Amount Financed | 50% |
| Interest Rate | 10% Annual Percentage Rate (A.P.R.) |
| Period of Repayment | 60 months |
| Monthly Payment | $ 404 per month on a $19,000 loan |
| Security Required | Personal Guaranty |
| Whether a Person Other than the Franchisee Must Personally Guarantee the Debt | If the franchisee is an entity, the owners of the franchisee entity must personally guarantee the debt |
| Prepayment Penalty | None |
| Liability Upon Default | Termination of Franchise Agreement; you must pay entire amount due, our attorney fees, and court costs in collecting debt. |
| Waiver of Defenses or Other Legal Right on Default | Waiver of right to jury trial; homestead and other exemptions; waiver of presentment, demand, protest, notice of dishonor. |
Source: Item 10 — FINANCING (FDD pages 31–32)
What This Means (2024 FDD)
According to Deka Lash's 2024 Franchise Disclosure Document, Deka Lash may offer financing to franchisees under specific conditions. Deka Lash does not offer financing until a franchisee has been operating for at least 24 months. After this period, Deka Lash may provide financing for the Initial Franchise Fee for any additional units the franchisee wishes to acquire. The availability and amount of financing are contingent on the availability of funds and the franchisee's creditworthiness.
If Deka Lash offers financing, it will cover 50% of the Initial Franchise Fee for additional unit rights acquired after the initial 24-month period. The franchisee is required to make a 50% down payment. The interest rate on the financed amount is 10% Annual Percentage Rate (A.P.R.), with repayment over 60 months. For example, the monthly payment would be $404 per month on a $19,000 loan.
The financing is secured by a personal guaranty. If the franchisee is an entity, the owners of the entity must personally guarantee the debt. There is no prepayment penalty. However, default on the financing can lead to termination of the Franchise Agreement, and the franchisee will be liable for the entire amount due, including Deka Lash's attorney fees and court costs incurred in collecting the debt. The franchisee also waives the right to a jury trial, homestead and other exemptions, and waives presentment, demand, protest, and notice of dishonor in the event of default.
Prospective franchisees should carefully consider these financing terms and conditions. While the financing option can help with the expansion of their Deka Lash business, it also carries significant financial risks. Franchisees should assess their creditworthiness and ability to repay the loan before taking on this obligation. It is also important to understand the implications of the personal guaranty and the potential consequences of default, including the loss of the franchise and associated legal costs.