Under what conditions will Deka Lash assume a lease?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
NOW, THEREFORE, for and in consideration of the execution of the Lease by Landlord and Tenant and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:
- I. Tenant assigns all of its right, title and interest in and to the Lease and the Premises to Franchisor, effective automatically without further action of Tenant upon notice from Franchisor to Landlord. Although it is the intention of the parties that this Agreement may be effective as a present assignment, it is expressly understood and agreed that until an event described below has occurred and Franchisor has exercised its remedies, Landlord shall look to Tenant for full performance of Tenant's obligations under the Lease. In no event shall Franchisor have any liability, duty, or obligation to Landlord under the Lease or otherwise without Franchisor's written consent in its sole discretion.
- II. With the exception of Sections III, IV, VIII, IX below which are effective as of the date this Agreement is fully executed by the parties, the assignment of Lease contemplated hereunder is conditional and shall not be effective until the "Effective Date," as defined in Section 5 of this Agreement. Franchisor shall have no right to assume the Lease unless and until:
- a. Default by Tenant under the terms of the Lease, which default is not cured by Tenant within the time limits provided therein; or
- b. Default by Tenant under the terms of the Franchise Agreement which default is not cured by Tenant within the time limits provided therein; or
- c. Voluntary institution of any insolvency or bankruptcy proceedings as a debtor or insolvent on the part of Tenant or involuntary insolvency or bankruptcy proceedings brought against Tenant which are not dismissed within 60 days of the filing thereof;
- d. Discontinuation by the Tenant of operation of a Deka Lash operation in the Premises, whether voluntarily or involuntarily; or
- e. Nonrenewal by Tenant of the Franchise Agreement
- III. During the term of the Lease, Landlord agrees to give Franchisor written notice of all defaults of Tenant concurrently with the giving of such notice to Tenant. Landlord
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to the 2024 Deka Lash Franchise Disclosure Document, Deka Lash will assume a franchisee's lease under specific conditions, which are effective upon notice from Deka Lash to the landlord. However, until Deka Lash exercises its remedies, the landlord will continue to look to the franchisee for full performance of the lease obligations. Deka Lash will not have any duty or obligation to the Landlord under the lease without Deka Lash's written consent.
The conditions under which Deka Lash may assume the lease include: the franchisee defaulting under the terms of the lease and failing to cure the default within the time limits provided in the lease; the franchisee defaulting under the terms of the Franchise Agreement and failing to cure the default within the time limits provided therein; the franchisee voluntarily instituting insolvency or bankruptcy proceedings, or involuntary proceedings being brought against them and not dismissed within 60 days; the franchisee discontinuing operation of the Deka Lash studio in the premises, whether voluntarily or involuntarily; or the franchisee not renewing the Franchise Agreement.
During the term of the lease, the landlord must provide Deka Lash with written notice of all franchisee defaults at the same time such notice is given to the franchisee. This allows Deka Lash to monitor the franchisee's compliance and decide whether to intervene to protect its interests. The assignment of the lease is conditional and only becomes effective upon the occurrence of one of the specified events and Deka Lash's subsequent decision to exercise its rights.
This arrangement provides Deka Lash with a mechanism to maintain control over the location of its franchises and ensure continued operation, while also protecting the landlord's interests by initially holding the franchisee responsible for the lease obligations. For a prospective franchisee, this means that Deka Lash has the ability to take over the lease if the franchisee fails to meet their obligations, which could impact the franchisee's business and investment.