Does the Virginia Addendum modify the Deka Lash Franchise Agreement by adding additional provisions?
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.
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 does modify the Franchise Agreement by adding provisions specific to Virginia law. If any terms of the Franchise Agreement are inconsistent with the Virginia Addendum, the terms of the addendum will take precedence.
One key modification relates to an escrow account for initial franchise fees. Due to Deka Lash's financial condition, the Virginia State Corporation Commission requires the establishment of an escrow account for all initial franchise fees. Franchisees in Virginia are required to make their payments to Truist Bank, which Deka Lash will then deposit into the escrow account within two business days.
These funds will be held in escrow until Deka Lash completes all pre-opening obligations outlined in Item 11 of the FDD. The funds will only be released to Deka Lash after the franchisee affirms in writing that Deka Lash has met these obligations and authorizes the release of the escrowed funds. This process is subject to authorization from the Virginia State Corporation Commission.
The Virginia Addendum also includes a provision ensuring that no statement or questionnaire signed by the franchisee can waive claims under Virginia franchise law, including fraud in the inducement, or disclaim reliance on statements made by Deka Lash. This provision supersedes any conflicting terms in other documents related to the franchise agreement, offering additional protection to Virginia franchisees.