Under what condition related to the development schedule can the Deka Lash development agreement be terminated if the developer fails to meet their obligations?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
- c) Failure to Meet Development Schedule. If Developer fails to meet its development obligations under the Development Schedule for any Development Period, and fails to cure such default within 30 days of receiving notice thereof; and
- d) Termination of Associated Franchise Agreement(s). If any Franchise Agreement that is entered into in order to fulfill Developer's development obligations under this Agreement is terminated or subject to termination by Franchisor, pursuant to the terms of that Franchise Agreement.
Upon termination of this Agreement, Franchisor may establish or license others to establish Deka Lash units and operations within the previously reserved Development Area without limitation or restriction. In addition, Developer's right to open and operate any of the remaining Franchises that have not yet opened for business in the Development Area is revoked and terminated. This means that Developer will have no further right to construct, equip, own, open or operate additional Deka Lash units which are not, at the time of termination or expiration, the subject of a then-existing Franchise Agreement between Franchisor and Developer which is in full force and effect.
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to the 2024 Deka Lash Franchise Disclosure Document, the development agreement can be terminated if the developer fails to meet the obligations outlined in the development schedule. Specifically, if the developer does not fulfill these obligations for any development period and fails to correct this failure within 30 days after receiving notice from Deka Lash, the agreement can be terminated.
This condition is significant for potential Deka Lash area developers as it emphasizes the importance of adhering to the agreed-upon development timeline. Failing to meet the schedule can lead to the termination of the development agreement, resulting in the loss of rights to open and operate any remaining franchises within the development area that have not yet opened for business. This means the developer would lose the opportunity to expand their Deka Lash business as initially planned.
Upon termination, Deka Lash has the right to establish or license others to establish Deka Lash units within the previously reserved development area without any restrictions. This highlights the risk a developer takes if they cannot meet the development schedule, as Deka Lash can then allow other franchisees to operate in the area the developer had initially secured for expansion. Therefore, prospective developers should carefully assess their ability to meet the development schedule before entering into the agreement.
In addition to the failure to meet the development schedule, the Deka Lash development agreement can also be terminated if any franchise agreement entered into to fulfill the developer's obligations is terminated or subject to termination by Deka Lash, according to the terms of that franchise agreement. This interdependency between the development agreement and individual franchise agreements further underscores the need for developers to maintain compliance and operational standards across all their Deka Lash units.