Under what conditions will Deka Lash defer the receipt of the initial franchise fee?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
VIRGINIA ADDENDUM TO THE FRANCHISE AGREEMENT
If any of the terms of the Franchise Agreement are inconsistent with the terms below, the terms below control
The Franchise Agreement is modified to also provide:
Escrow Account:
Due to our financial condition, the Virginia State Corporation Commission's Division of Securities and Retail Franchising requires us to establish an escrow account for all initial franchise fees that we charge. You shall make your check for franchise fees or other payments to the depository (Truist Bank) and send the check to us. Within two business days of our receipt of the check, we will deposit the check into an escrow account that we have established with Truist.Bank.
When we complete all of our pre-opening obligations to you (listed in Item 11 of this Disclosure Document), we will request that you affirm, in writing, that we have completed those obligations and that you assent to release of the funds held in escrow. After receipt of authorization from the Commission, the depository shall release the funds held in escrow by the depository to us to be applied to your account with us.
No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
(Name of corporation, partnership, limited liability company or other legal entity or individually if blank) FRANCHISOR DL Franchising, LLC d/b/a Deka Lash
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to the 2024 Deka Lash Franchise Disclosure Document, the Virginia Addendum to the Franchise Agreement addresses conditions related to the initial franchise fee. Due to Deka Lash's financial condition, the Virginia State Corporation Commission's Division of Securities and Retail Franchising requires Deka Lash to establish an escrow account for all initial franchise fees. Franchisees in Virginia must make their check for franchise fees or other payments to the depository (Truist Bank) and send the check to Deka Lash. Within two business days of receipt, Deka Lash will deposit the check into an escrow account established with Truist Bank.
When Deka Lash completes all pre-opening obligations to the franchisee, as listed in Item 11 of the Disclosure Document, Deka Lash will request written affirmation from the franchisee that these obligations have been met and that the franchisee assents to the release of the funds held in escrow. After receiving authorization from the Commission, the depository will release the funds held in escrow to Deka Lash, to be applied to the franchisee's account.
This arrangement ensures that the initial franchise fees are protected until Deka Lash fulfills its pre-opening obligations to the franchisee. It also states that no statement, questionnaire, or acknowledgment signed by a franchisee can waive claims under state franchise law, including fraud, or disclaim reliance on statements made by Deka Lash or its representatives. This provision supersedes any other conflicting term in any document related to the franchise agreement, offering additional protection to the franchisee.