In Virginia, if there are inconsistencies between the standard Deka Lash Franchise Agreement and the Virginia Addendum, which document's terms will take precedence?
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 Deka Lash's 2024 Franchise Disclosure Document, the terms of the Virginia Addendum take precedence over the standard Franchise Agreement if any inconsistencies exist between the two documents. This applies specifically if the franchise territory is located in Virginia. This means that franchisees operating in Virginia must adhere to the specific modifications and stipulations outlined in the Virginia Addendum, which are designed to address state-specific legal and regulatory requirements.
For a prospective Deka Lash franchisee in Virginia, this is an important consideration. The Virginia Addendum modifies the standard agreement to comply with Virginia law. One key modification relates to the establishment of an escrow account for initial franchise fees due to Deka Lash's financial condition, as required by the Virginia State Corporation Commission's Division of Securities and Retail Franchising. Franchisees must make their payments to Truist Bank, which Deka Lash will then deposit into the escrow account. These funds are released to Deka Lash only after they have fulfilled their pre-opening obligations and the franchisee confirms this in writing.
Furthermore, the Virginia Addendum includes a provision that protects franchisees by ensuring that no agreement signed at the start of the franchise relationship can waive claims under Virginia franchise law, including those related to fraud or reliance on franchisor statements. This provision explicitly supersedes any conflicting terms in other documents executed in connection with the franchise. Therefore, prospective franchisees in Virginia should carefully review the Virginia Addendum to understand their rights and obligations under Virginia law, as these terms will override any conflicting provisions in the standard Franchise Agreement.