Deka Lash
Beauty & Personal Care
Founded 2015130 locationsCompany Profile
Year Founded:2015
Deka Lash Franchise Cost
| Franchise Fee: | $59,900Key Metric |
| Total Investment: | $286,000 - $449,000Key Metric |
| Liquid Capital: | $67,500 |
| Royalty Fee: | 6% of gross sales |
| Marketing Fee: | 3% of gross sales |
Quick ROI Calculator
Based on Deka Lash's actual financial data
Outlet Counts by Year
Historical outlet data extracted from FDD documents
Total US Locations:130
Scale relative to 1,000 locations
Franchised Units:130
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AI-Powered Due Diligence Analysis
Our advanced AI analyzes Franchise Disclosure Documents (FDDs) to identify potential risks and opportunities across 10 critical categories.
16
High Risk
Critical items
40% of total
20
Medium Risk
Monitor closely
50% of total
4
Low Risk
Manageable items
10% of total
40
Total Items
Factors analyzed
10 categories
6.50
Overall Score
Low RiskHigh Risk
010
Franchisor Stability Risks
6 risks identified
2
3
1
Rapid Growth and Potential Over-Saturation
Medium
Explanation:
- Deka Lash experienced significant growth between 2021 and 2022, adding 21 net units. While growth slowed in 2023 (+1 net unit), rapid expansion can lead to market oversaturation, increased competition among franchisees, and difficulty securing prime locations.
- This is particularly concerning given the localized nature of beauty services. Too many units in a given area could cannibalize each other's business.
Potential Mitigations:
- Carefully review the franchisor's market analysis and development plans for your territory. Ensure they have a strategic approach to growth that avoids oversaturation.
- Discuss with existing franchisees the level of competition and market saturation in their areas.
- Investigate the demographics and competitive landscape of your target market independently.
FDD Citations:
- Item 20, Table 1: Shows the net unit growth from 2021-2023.
High Franchisee Turnover/Churn
High
Explanation:
- Item 20, Table 2 shows a substantial increase in franchisee transfers from 2 to 8 to 11 in the years 2021, 2022, and 2023 respectively. This escalating trend of transfers could indicate underlying issues such as franchisee dissatisfaction, lack of profitability, or disputes with the franchisor.
- While transfers themselves aren't inherently negative, a high volume raises concerns about the long-term viability and support provided to franchisees.
Potential Mitigations:
- Contact a significant number of current and former franchisees (beyond the required list) to understand the reasons behind the transfers. Ask specifically about their experience with the franchisor, profitability, and support.
- Analyze the financial performance representations carefully and compare them to the actual performance of existing franchisees.
- Consult with a franchise attorney to review the franchise agreement and understand the terms related to transfers and terminations.
FDD Citations:
- Item 20, Table 2: Details the number of franchise transfers for each year.
Area Representatives/Developers Also Franchisees - Potential Conflicts of Interest
Medium
Explanation:
- Item 2 reveals that many Area Representatives are also franchisees. This dual role creates a potential conflict of interest. Area Representatives are incentivized to sell franchises, even if it leads to market oversaturation or isn't in the best interest of individual franchisees.
- They may prioritize their own franchise locations over those of other franchisees they are supposed to support.
Potential Mitigations:
- Thoroughly investigate the track record and reputation of the Area Representative for your region. Speak with franchisees in their area to understand their experience with the support and guidance provided.
- Carefully review the franchise agreement to understand the specific responsibilities and obligations of the Area Representative and the franchisor in cases of conflict.
- Seek legal counsel to assess the potential risks associated with this dual-role structure.
FDD Citations:
- Item 2: Lists the Area Representatives and their other business interests, including franchise ownership.
Potential Legal and Regulatory Risks Related to Franchise Sales Incentives
Low
Explanation:
- The amendment to Item 1 regarding franchise broker registration in Washington suggests that the franchisor may be offering financial incentives for franchisee referrals. While not inherently problematic, such incentives can create legal and regulatory complexities if not handled properly.
Potential Mitigations:
- Clarify with the franchisor the exact nature of any referral programs and ensure they are compliant with all applicable state and federal regulations.
- Consult with a franchise attorney to understand the implications of participating in such programs and any potential liabilities.
FDD Citations:
- Item 1 Amendment: "Franchisees who receive financial incentives to refer franchise prospects to franchisors may be required to register as franchise brokers under the laws of Washington."
Company-Owned Outlets Eliminated - Potential Shift in Strategy
Medium
Explanation:
- Item 20, Table 1 indicates that all company-owned outlets were eliminated in 2023. While the FDD states these were operated by an affiliate (DL Studios, LLC), this complete divestiture of company-owned locations represents a significant shift in strategy. It could signal a move away from direct operational experience and a greater reliance on franchise fees.
- This could potentially impact the level of support and innovation provided to franchisees.
Potential Mitigations:
- Inquire with the franchisor about the reasons for eliminating company-owned units and how this will affect ongoing support, training, and product development for franchisees.
- Assess whether the franchisor has sufficient infrastructure and personnel in place to support a fully franchised model.
FDD Citations:
- Item 20, Table 1: Shows the decrease in company-owned units to zero in 2023.
Relatively Young Franchise System
High
Explanation:
- Founded in 2015, Deka Lash is a relatively young franchise system. This presents inherent risks related to brand recognition, operational experience, and long-term stability. Younger franchises may lack the established track record and proven business model of more mature brands.
- They may also be more susceptible to economic downturns or changes in consumer preferences.
Potential Mitigations:
- Carefully evaluate the franchisor's management team's experience and their plans for navigating the challenges of a growing franchise system.
- Seek out detailed information on the franchisor's financial performance and stability.
- Speak with a large number of current franchisees to assess their satisfaction and confidence in the brand's future.
FDD Citations:
- General Information: Deka Lash founded in 2015.
Disclosure & Representation Risks
2 risks identified
1
1
Incomplete Disclosure Document
High
Explanation:
- The provided FDD excerpt is incomplete. Item 23 mentions Exhibit N containing the Receipt, but the actual content of the Receipt is missing. This makes it impossible to verify proper disclosure procedures were followed.
- Exhibit A references State Addenda, specifically a California Addendum, but only provides a partial text mentioning the requirement for agreement copies. The absence of the full addendum and the actual agreements creates a significant information gap, preventing a thorough risk assessment.
- The repeated insertion of extraneous text related to franchimp.com and franchise.fyi raises concerns about the document's integrity and source. This could indicate unauthorized modification or an unreliable source, further hindering proper due diligence.
Potential Mitigations:
- Obtain the complete FDD document directly from Deka Lash or a reputable source, ensuring it includes all exhibits and addenda.
- Verify the authenticity of the document with Deka Lash representatives to rule out any unauthorized alterations.
- Specifically request copies of Exhibit N (Receipt of Disclosure Document) and the full California Addendum, including all referenced agreements, to review the complete disclosure information.
FDD Citations:
- Item 23: "Exhibit N contains two copies of a Receipt of our Disclosure Document."
- Exhibit A, California Addendum: "THE CALIFORNIA FRANCHISE INVESTMENT LAW REQUIRES THAT A COPY OF ALL PROPOSED AGREEMENTS RELATING TO THE SALE OF THE FRANCHISE BE DELIVERED TOGETHER WITH THE FRANCHISE DISCLOSURE DOCUMENT."
California Franchise Investment Law Compliance
Medium
Explanation:
- The California Addendum highlights the state's specific franchise regulations, indicating potential variations from the standard FDD terms. Without the full addendum text, it's impossible to assess the specific differences and their potential impact on the franchisee.
- The addendum emphasizes the legal requirement to provide copies of all proposed agreements with the FDD. The absence of these agreements prevents a comprehensive understanding of the franchise relationship and associated obligations.
Potential Mitigations:
- Obtain the complete California Addendum and all referenced agreements to review the specific terms and conditions applicable to California franchises.
- Consult with a legal professional specializing in California franchise law to understand the implications of the state-specific regulations and ensure compliance.
- Compare the California Addendum with the main FDD to identify any discrepancies and assess their potential impact on the franchise investment.
FDD Citations:
- Exhibit A, California Addendum: "As to franchises governed by the California Franchise Investment Law, if any of the terms of the Disclosure Document are inconsistent with the terms below, the terms below control."
- Exhibit A, California Addendum: "THE CALIFORNIA FRANCHISE INVESTMENT LAW REQUIRES THAT A COPY OF ALL PROPOSED AGREEMENTS RELATING TO THE SALE OF THE FRANCHISE BE DELIVERED TOGETHER WITH THE FRANCHISE DISCLOSURE DOCUMENT."
Financial & Fee Risks
3 risks identified
2
1
High Royalty Fees and Increasing Minimums
High
Explanation:
- Royalty fees are 6% of gross sales or a minimum of $600 per month, increasing to $1,000 per month after the first year. This high percentage and escalating minimum could significantly impact profitability, especially during slower months or initial growth phases.
- The combined royalty and brand development fees (6% + 3%) represent a substantial 9% of gross sales, further squeezing margins.
Potential Mitigations:
- Develop highly accurate financial projections that account for these escalating fees and ensure sufficient revenue to cover them.
- Negotiate with the franchisor for a lower initial minimum fee or a more gradual increase.
- Focus on aggressive sales and marketing strategies to maximize revenue and exceed the minimum royalty thresholds quickly.
FDD Citations:
- Item 6: "Royalty (Notes 1 and 2) - 6% of Gross Studio Sales or $600 per month, whichever is greater. After your 1ˢᵗ year of operations, the minimum Royalty Fee increases to $1,000 per month."
- Item 6: "Brand Development Fee - The greater of 3% of Gross Studio Sales or, after the 1ˢᵗ year of operations, $500 per month."
High and Potentially Increasing Marketing Requirements
High
Explanation:
- The minimum local marketing requirement of $2,000 per month is substantial and could strain cash flow, especially in the early stages.
- The franchisor has the right to demand payment of any unspent marketing funds, adding further financial burden.
Potential Mitigations:
- Develop a detailed marketing plan with clear ROI targets to ensure efficient use of funds.
- Explore cooperative marketing opportunities with other franchisees to leverage shared resources and reduce individual costs.
- Negotiate with the franchisor for flexibility in the local marketing requirement, especially during the initial ramp-up period.
FDD Citations:
- Item 6: "Minimum Local Marketing Requirement - Minimum of $2,000 per month."
- Item 6: "If you fail to spend the minimum amount on Local Marketing, we have the right to require you to pay the unspent required balance to the Brand Development Fund."
Mandatory Customer Service Center with Variable Fees
Medium
Explanation:
- Franchisees are required to use the franchisor's Customer Service Center and pay associated fees, which are currently $600 per month but can be modified at any time.
- This lack of control over a crucial customer-facing function could impact service quality and profitability.
Potential Mitigations:
- Carefully review the Customer Service Center agreement for details on fee structures, performance metrics, and service level agreements.
- Request historical data on the Customer Service Center's performance and cost fluctuations.
- Negotiate for greater transparency and predictability in fee adjustments.
FDD Citations:
- Item 6: "Customer Service Center Fee - Presently $600 per month but we reserve the right to modify this at any time…"
- Item 6: "If required by us, you must participate in the customer service center and you agree to pay all reasonable fees imposed by the provider for those services."
Legal & Contract Risks
3 risks identified
1
2
Renewal Terms at Franchisor's Discretion
High
Explanation:
- The FDD states that renewal is at the franchisor's discretion and subject to their then-current franchise agreement, which may have materially different terms. This creates significant uncertainty and potential for unfavorable changes upon renewal.
- The franchisor can refuse renewal based on "satisfactory compliance," a subjective measure solely determined by them, leaving franchisees vulnerable.
- The required general release upon renewal could prevent franchisees from pursuing legal action against the franchisor for past grievances.
Potential Mitigations:
- Negotiate for more specific and objective renewal criteria in the franchise agreement.
- Consult with a franchise attorney to review the renewal clause and understand potential implications.
- Request clarity on the typical changes made to franchise agreements upon renewal and historical renewal rates.
FDD Citations:
- Item 2.2: "You may renew the Franchise under the terms of our then-current Franchise Agreement…"
- Item 2.2(d): "Execute a general release, in a form we prescribe…"
- Item 2.3(b): "We may refuse to renew…The determination of satisfactory compliance will be within our exclusive discretion…"
Limited Protected Territory
Medium
Explanation:
- The FDD mentions a "Protected Area" but doesn't guarantee exclusivity. The franchisor may authorize other Deka Lash studios or competing businesses within this area, potentially impacting profitability.
- The vague language around protected territories creates ambiguity and potential for disputes.
Potential Mitigations:
- Negotiate for a clearly defined and exclusive territory, specifying restrictions on the franchisor's ability to authorize other locations nearby.
- Thoroughly research the competitive landscape within the proposed Protected Area and surrounding regions.
- Consult with a franchise attorney to review the territorial provisions and understand potential risks.
FDD Citations:
- Item 3.4: "Protected Area/Exclusive Territory" (lack of specific details on exclusivity)
Relocation Restrictions
Medium
Explanation:
- Relocation of the Franchised Business is subject to franchisor approval and is only considered under limited circumstances, restricting flexibility.
- The franchisor's criteria for approving relocation are not clearly defined, creating uncertainty.
Potential Mitigations:
- Negotiate for clearer relocation terms, including specific criteria for approval and a more streamlined process.
- Carefully evaluate the long-term suitability of the proposed location before signing the agreement.
FDD Citations:
- Item 3.3: "We will not normally approve the relocation…unless there is a material change…"
Territory & Competition Risks
3 risks identified
2
1
Competition from Franchisor's Online Sales and Alternative Distribution Channels
High
Explanation:
- The franchisor reserves the right to sell products and services online and through other channels, potentially competing directly with franchisees within their protected territories.
- This competition could significantly impact franchisee sales, particularly given the increasing prevalence of online shopping and the franchisor's unrestricted access to these channels.
Potential Mitigations:
- Negotiate with the franchisor to establish clear boundaries for online sales and alternative distribution channels, potentially limiting their reach within franchisee territories.
- Focus on building strong local customer relationships and providing personalized services that are difficult to replicate online.
- Leverage local marketing and community engagement to differentiate the franchise from the franchisor's online presence.
FDD Citations:
- Item 12: "We and our affiliates also reserve the right in your Protected Area to… Sell approved products and services… through all alternative channels of distribution… including, but not limited to, the internet… without paying compensation to you for soliciting or accepting orders inside your territory."
- Item 12: "You understand that the Franchise Agreement grants you no rights: (i) to distribute such products through alternative channels of distribution (such as the Internet…); or (ii) to share in any of the proceeds received by any party selling through alternative channels of distribution."
Performance-Based Termination Due to Revenue or Membership Requirements
High
Explanation:
- The Franchise Agreement stipulates minimum Gross Revenue of $15,000 per month or 75 members after two years, failing which the franchisor may terminate the agreement.
- This creates significant pressure on franchisees to achieve these targets, even in challenging economic conditions or unforeseen circumstances.
Potential Mitigations:
- Thoroughly analyze the market and financial projections to assess the feasibility of achieving the required revenue and membership targets.
- Develop a robust business plan with contingency strategies for addressing potential shortfalls.
- Negotiate with the franchisor for flexibility in the performance requirements, especially during the initial years of operation.
FDD Citations:
- Item 12: "After two years from the Effective Date of your Franchise Agreement you are required to have minimum Gross Revenue of $15,000 per month in a Territory or a minimum of 75 members in our membership program in a Territory, or we may terminate your Franchise Agreement."
Limited Control Over Marketing and Advertising
Medium
Explanation:
- All marketing and advertising efforts, including online and social media activities, require prior written approval from the franchisor.
- This restricts the franchisee's flexibility and responsiveness to local market conditions and may limit their ability to implement innovative marketing strategies.
Potential Mitigations:
- Clearly understand the franchisor's marketing guidelines and approval process upfront.
- Maintain open communication with the franchisor's marketing team and proactively seek approvals for planned campaigns.
- Explore opportunities for localized marketing initiatives within the franchisor's guidelines, such as community events and partnerships.
FDD Citations:
- Item 12: "All marketing and advertising, including through other channels of distribution such as the Internet, social media… must be approved by us, in writing, for each occurrence, in advance."
Regulatory & Compliance Risks
6 risks identified
2
3
1
Mandatory Use of Affiliate Supplier and Potential Overpricing
High
Explanation:
- Franchisees are required to purchase numerous products and services exclusively from Deka Lash's affiliate, DL Products, LLC, or designated vendors. This creates a significant risk of overpricing as the franchisor controls the supply chain and can set prices without competitive pressure.
- The FDD discloses that DL Products, LLC generated substantial revenue from these mandatory purchases, raising concerns about potential conflicts of interest and prioritization of affiliate profits over franchisee profitability.
- Lack of transparency in pricing and vendor selection criteria further exacerbates this risk.
Potential Mitigations:
- Carefully analyze the pricing of required products and services from DL Products, LLC and compare them to market rates for similar offerings.
- Request detailed cost breakdowns from DL Products, LLC to understand the basis for their pricing.
- Negotiate with the franchisor for greater flexibility in sourcing products and services from alternative vendors, especially if significant cost discrepancies are identified.
FDD Citations:
- Item 8: "You must purchase all eyelash extensions, adhesives, brow products, skincare products, resale products and related products from us, our affiliate, DL Products, LLC or a vendor we designate."
- Item 8: "In our last fiscal year ending December 31, 2023, our affiliate DL Products, LLC earned revenue of $3,162,933 selling eyelash extensions and related products and Deka labeled products to our franchisees, representing 33.6% of total revenue."
Limited Vendor Selection and Potential Supply Chain Disruptions
Medium
Explanation:
- The restricted vendor pool and reliance on a single affiliate supplier increase the risk of supply chain disruptions. Any issues with DL Products, LLC's production or distribution could significantly impact franchisees' ability to operate.
- Limited alternative supplier options and the franchisor's control over vendor approval create further vulnerabilities.
Potential Mitigations:
- Inquire about DL Products, LLC's business continuity plans and contingency measures in case of disruptions.
- Explore the possibility of pre-negotiating agreements with alternative suppliers, subject to franchisor approval, to ensure backup options are available.
- Maintain adequate inventory levels to mitigate the impact of potential short-term supply chain disruptions.
FDD Citations:
- Item 8: "DL Products, LLC is an approved supplier, and currently the only approved supplier, of eyelash extension and related products and Deka labeled products."
- Item 8: "We do not maintain written criteria for approving suppliers and thus these criteria are not available to you or your proposed supplier."
Franchisor Revenue from Required Purchases and Potential Conflict of Interest
High
Explanation:
- The FDD discloses that the franchisor derives significant revenue from required purchases, creating a potential conflict of interest. The franchisor may be incentivized to prioritize its own financial gain over franchisee profitability.
- The lack of transparency regarding supplier payments to the franchisor further raises concerns about potential hidden fees and markups.
Potential Mitigations:
- Thoroughly review the FDD to understand all sources of franchisor revenue related to required purchases.
- Request detailed information on the financial arrangements between the franchisor and its designated suppliers.
- Consult with a franchise attorney to assess the potential legal implications of the franchisor's revenue streams and related conflicts of interest.
FDD Citations:
- Item 8: "In our last fiscal year ending December 31, 2023, we earned revenue of $999,433 from required purchases or leases by franchisees, representing 10.6% of our total revenue."
- Item 8: "Designated suppliers may make payments to us from franchisee purchases."
Mandatory Advertising and Marketing Restrictions
Medium
Explanation:
- Franchisees are required to use franchisor-approved advertising materials, potentially limiting their ability to tailor marketing efforts to local market conditions.
- This restriction could hinder franchisees' ability to effectively reach their target audience and compete with other businesses in their area.
Potential Mitigations:
- Review the franchisor's advertising materials and programs to assess their quality and suitability for your target market.
- Negotiate with the franchisor for greater flexibility in adapting marketing materials to local needs.
- Request data on the effectiveness of the franchisor's advertising programs.
FDD Citations:
- Item 8: "You must use advertising material provided by us, a vendor that we designate, or we must approve the advertising in writing, prior to its use."
Mandatory Customer Service Center Participation and Fees
Medium
Explanation:
- Franchisees are required to participate in the franchisor's customer service center and pay associated fees, which could represent a significant expense.
- The lack of transparency regarding the fee structure and the services provided by the customer service center creates a risk of unexpected costs and potentially inadequate service levels.
Potential Mitigations:
- Request detailed information on the customer service center's fee structure, services provided, and performance metrics.
- Negotiate with the franchisor for greater transparency and control over customer service operations.
- Assess the potential impact of customer service center fees on your projected operating costs.
FDD Citations:
- Item 8: "If required by us, you must participate in the customer service center and you agree to pay all reasonable fees imposed by the provider for those services."
Potential Franchise Broker Registration Requirement in Washington
Low
Explanation:
- Franchisees in Washington who receive financial incentives for referring prospects may be required to register as franchise brokers, which entails additional compliance obligations and costs.
- This requirement applies only to franchisees operating in Washington and receiving referral incentives.
Potential Mitigations:
- If operating in Washington, carefully review the state's franchise broker registration requirements.
- Consult with legal counsel to determine if your referral activities trigger the registration requirement.
- Factor in the potential costs and administrative burden of franchise broker registration when evaluating the franchise opportunity.
FDD Citations:
- Item 1: "Franchisees who receive financial incentives to refer franchise prospects to franchisors may be required to register as franchise brokers under the laws of Washington."
Franchisor Support Risks
2 risks identified
1
1
Limited Franchisor Support Details
Medium
Explanation:
- Item 11 mentions Area Representatives offering support like business advising, document review, and financial review. However, it lacks specifics about the frequency, duration, cost (if any), and qualifications of these representatives.
- The vague description makes it difficult to assess the quality and consistency of the support provided, which is crucial for new franchisees.
- It's unclear whether this support is mandatory or optional, and how it integrates with direct franchisor support.
Potential Mitigations:
- Request detailed information about the Area Representative program, including their experience, training, and performance metrics.
- Inquire about the specific support services offered, their availability, and any associated costs.
- Clarify the roles and responsibilities of both the franchisor and Area Representatives in providing ongoing support.
- Speak with existing franchisees to understand their experience with the support system and the effectiveness of Area Representatives.
FDD Citations:
- Item 11: "The Area Representatives listed above may offer certain assistance to you...This support may include business advising and counseling, document review, financial review, and assistance with franchisor relations."
Reliance on Area Representatives for Franchisor Support
High
Explanation:
- The FDD highlights Area Representatives as a primary source of support, raising concerns about the franchisor's direct involvement in assisting franchisees.
- Over-reliance on Area Representatives, who may have their own business interests, could lead to inconsistent support quality and potential conflicts of interest.
- The FDD doesn't clearly define the relationship between the franchisor and Area Representatives, creating ambiguity about accountability and responsibility for franchisee success.
Potential Mitigations:
- Request clarification on the franchisor's direct support mechanisms beyond the Area Representatives.
- Investigate the Area Representatives' business model and potential conflicts of interest. Understand their incentives and how they are compensated.
- Seek legal counsel to review the franchise agreement and ensure adequate provisions for franchisor support and recourse in case of inadequate assistance.
- Contact existing franchisees to gauge their experience with both the franchisor and Area Representatives, focusing on the responsiveness and effectiveness of support received.
FDD Citations:
- Item 11: "The Area Representatives listed above may offer certain assistance to you..."
Exit & Transfer Risks
6 risks identified
2
3
1
Limited Transfer Rights
High
Explanation:
- Item 14 details stringent requirements for transferring the franchise, including franchisor's right of first refusal, approval of the transferee (which can be withheld for any reason), and potential fees.
- This significantly restricts the franchisee's ability to sell their business and realize their investment, potentially leaving them trapped in the franchise agreement.
Potential Mitigations:
- Carefully review Item 14 and negotiate for more favorable terms regarding transfer rights before signing the agreement.
- Seek legal counsel specializing in franchising to understand the implications and potential challenges.
- Develop a strong business plan and operational strategy to maximize the franchise's value and attractiveness to potential buyers, increasing the likelihood of franchisor approval.
FDD Citations:
- Item 14: "We have the right of first refusal to purchase your Franchised Business…We may refuse to approve any proposed transferee for any reason."
Renewal Not Guaranteed
High
Explanation:
- Renewal is not automatic and is subject to franchisor's approval, which can be withheld if the franchisee is deemed not in "good standing" or fails to meet other conditions.
- The franchisor can also impose materially different terms and conditions in the renewed agreement, potentially impacting profitability and operational flexibility.
- This creates uncertainty about the long-term viability of the business and the return on investment beyond the initial term.
Potential Mitigations:
- Maintain meticulous records of compliance with all franchise agreement terms and conditions.
- Proactively address any potential issues or disputes with the franchisor to maintain a positive relationship.
- Consult with a franchise attorney to understand the renewal process and negotiate favorable terms in the initial agreement.
FDD Citations:
- Item 2.2: "If you are not in breach of this Agreement, and if you meet the following conditions…you may renew the Franchise."
- Item 2.3(a): "Royalty Fees, Brand Development Fund Fees, and other fees will be set under the then-current Franchise Agreement and may vary materially."
Relocation Restrictions
Medium
Explanation:
- Relocating the franchised business is subject to franchisor approval, which is only granted under specific circumstances like material changes in economic factors.
- This limits the franchisee's flexibility to adapt to changing market conditions or optimize their business location.
Potential Mitigations:
- Thoroughly research and analyze the chosen location's long-term viability before signing the agreement.
- Negotiate with the franchisor for more flexible relocation terms, if possible.
- Include a clause in the lease agreement allowing for termination under specific circumstances that might necessitate relocation.
FDD Citations:
- Item 3.3: "We will not normally approve the relocation of the Franchised Business unless there is a material change in economic or other factors affecting your outlet."
No Automatic Right to Continue After Expiration
Medium
Explanation:
- There's no automatic right to continue operating the business after the initial term expires, even if the franchisee desires to do so without renewing.
- Continued operation without a renewed agreement becomes a month-to-month arrangement, terminable by either party with 30 days' notice, creating significant uncertainty.
Potential Mitigations:
- Engage in renewal discussions with the franchisor well in advance of the expiration date.
- Understand the franchisor's renewal requirements and prepare to meet them.
- Develop a contingency plan in case renewal is not granted or terms are unfavorable.
FDD Citations:
- Item 2.3(c): "You have no automatic right to continue operation of the Franchise following expiration or termination of this Agreement."
Potential Conflict with Wisconsin Fair Dealership Law
Medium
Explanation:
- The FDD mentions a modification to Item 17 to address potential conflicts with the Wisconsin Fair Dealership Law, suggesting the franchise agreement might contain provisions less favorable than the law provides.
- This could create legal complexities and disputes, particularly regarding termination and non-renewal.
Potential Mitigations:
- If operating in Wisconsin, carefully review the modified Item 17 and compare it with the Wisconsin Fair Dealership Law.
- Seek legal counsel specializing in Wisconsin franchise law to understand the implications and potential risks.
- Negotiate with the franchisor to align the agreement with the protections offered by the state law.
FDD Citations:
- Item 17 Modification: "If the franchise agreement contains any provisions that conflict with the Wisconsin Fair Dealership Law, the provisions of this Addendum shall prevail to the extent of such conflict."
Franchise Agreement Supersedes State Law in Case of Conflict
Low
Explanation:
- The FDD explicitly states that the franchise agreement's provisions will prevail in case of conflict with the Wisconsin Fair Dealership Law. This could potentially erode some of the protections offered by the state law.
Potential Mitigations:
- Carefully review the franchise agreement and the Wisconsin Fair Dealership Law to understand the potential discrepancies and their implications.
- Consult with a franchise attorney specializing in Wisconsin law to assess the risks and potential legal recourse.
FDD Citations:
- Item 17 Modification: "If the franchise agreement contains any provisions that conflict with the Wisconsin Fair Dealership Law, the provisions of this Addendum shall prevail to the extent of such conflict."
Operational & Brand Risks
3 risks identified
1
2
Mandatory Use of Affiliate Supplier (DL Products, LLC)
High
Explanation:
- Franchisees are required to purchase key products (eyelash extensions, related products, Deka labeled products) exclusively from DL Products, LLC, an affiliate of the franchisor. This creates a significant risk of inflated pricing and reduced profitability for franchisees as they lack the ability to negotiate better deals with alternative suppliers.
- The franchisor's officers have a direct ownership interest in DL Products, LLC, creating a potential conflict of interest where decisions about pricing and product quality could be influenced by the franchisor's own financial gain rather than the franchisee's best interests.
- DL Products, LLC generated a substantial portion (33.6%) of its revenue from franchisees, highlighting the franchisees' dependence on this single supplier and the potential for exploitation.
Potential Mitigations:
- Carefully analyze the pricing of DL Products, LLC and compare it to market rates for similar products. Negotiate with the franchisor for transparent pricing and reasonable markups.
- Join or form a franchisee association to collectively bargain for better pricing and terms with DL Products, LLC.
- Consult with a franchise attorney to understand your rights and options regarding mandatory supplier arrangements.
FDD Citations:
- Item 8: "You must purchase all eyelash extensions, adhesives, brow products, skincare products, resale products and related products from us, our affiliate, DL Products, LLC or a vendor we designate."
- Item 8: "Our officers, Michael Blair, Michael Debenham, and Jennifer Blair own an interest in us and in our affiliate, DL Products, LLC."
- Item 8: "In our last fiscal year ending December 31, 2023, our affiliate DL Products, LLC earned revenue of $3,162,933 selling eyelash extensions and related products and Deka labeled products to our franchisees, representing 33.6% of total revenue."
Limited Supplier Approval Process
Medium
Explanation:
- The FDD states that the franchisor does not maintain written criteria for approving alternative suppliers. This lack of transparency creates uncertainty and potential bias in the approval process, making it difficult for franchisees to secure approval for potentially more cost-effective suppliers.
- The franchisor may charge franchisees for the costs of evaluating alternative suppliers, creating a financial disincentive for exploring other options.
Potential Mitigations:
- Request a clear explanation of the supplier approval process, including any unwritten criteria. Document all communications with the franchisor regarding supplier approvals.
- Negotiate a cap on the fees charged for evaluating alternative suppliers.
- Before signing the franchise agreement, identify potential alternative suppliers and proactively seek pre-approval.
FDD Citations:
- Item 8: "We do not maintain written criteria for approving suppliers and thus these criteria are not available to you or your proposed supplier."
- Item 8: "We may charge you for the reasonable expenses and costs we incur to test and approve these suppliers, products, or services."
Mandatory Customer Service Center Participation
Medium
Explanation:
- Franchisees are required to use the franchisor's Customer Service Center and pay associated fees, potentially impacting profitability and control over customer interactions.
- The FDD does not specify the fees for the Customer Service Center, creating uncertainty about this significant cost.
Potential Mitigations:
- Request a detailed breakdown of the Customer Service Center fees and compare them to the cost of managing customer service in-house.
- Negotiate for performance metrics and service level agreements with the Customer Service Center to ensure quality and responsiveness.
- Review the Operations Manual for details on the Customer Service Center operations and franchisee responsibilities.
FDD Citations:
- Item 8: "Currently we offer a Customer Service Center and require that you use it."
- Item 8: "The fee is as specified in the Operations Manual."
Performance & ROI Risks
6 risks identified
2
3
1
No Financial Performance Representations
High
Explanation:
- Item 10 explicitly states that no sales, revenue, income, profit, or expense projections are provided outside of Item 19. The absence of performance representations makes it difficult to assess the potential profitability and financial viability of the franchise.
- Without benchmarks or historical data, prospective franchisees are left to make investment decisions based on limited information, increasing the risk of unrealistic expectations and potential financial losses.
Potential Mitigations:
- Carefully review Item 19 for any available financial information, even if limited. Consult with a financial advisor to analyze the available data and develop realistic financial projections.
- Conduct thorough market research in your target area to assess local demand, competition, and pricing. This can help inform your own independent financial projections.
- Network with existing Deka Lash franchisees to gain insights into their financial performance. However, be aware that individual results can vary significantly.
FDD Citations:
- Item 10: "Except as contained in your Franchise Disclosure Document, including Item 19, no... claim or representation has been made... which states or suggests any actual, average, projected or forecasted sales, gross receipts... or otherwise."
No Franchisor Financial Assistance
High
Explanation:
- Item 13 clarifies that the franchisor does not provide financial assistance and makes no guarantees of buying back any products, supplies, or equipment. This lack of support can pose a significant risk, especially during challenging economic times or if the business underperforms.
- Franchisees are solely responsible for securing funding and managing their finances, increasing the risk of financial strain if unexpected expenses arise or revenue targets are not met.
Potential Mitigations:
- Secure sufficient financing upfront to cover not only the initial investment but also ongoing operating expenses and potential shortfalls during the initial ramp-up period.
- Develop a comprehensive business plan with detailed financial projections and contingency plans for various scenarios.
- Explore alternative financing options and establish relationships with multiple lenders to ensure access to capital if needed.
FDD Citations:
- Item 13: "I acknowledge that I will not be provided financial assistance by the franchisor and the franchisor has made no representation that they will buy back any products, supplies, territories or equipment."
Franchisee Dependence on Own Management
Medium
Explanation:
- Item 15 emphasizes that the franchisee's success depends primarily on their own efforts, not the franchisor's. While this is generally true for any business, it highlights the importance of the franchisee's managerial skills and experience in the beauty industry.
- Lack of experience in business management, marketing, or the specific industry can negatively impact the franchise's performance and profitability.
Potential Mitigations:
- Honestly assess your own strengths and weaknesses in business management and seek training or mentorship in areas where you lack experience.
- Actively participate in the franchisor's training programs and utilize the provided resources and support systems.
- Build a strong local management team with relevant experience in the beauty industry and customer service.
FDD Citations:
- Item 15: "I acknowledge that it is my responsibility to participate in the day-to-day management of my Deka Lash franchise and the success or failure of my Deka Lash franchise depends primarily upon my efforts and not those of Deka Lash."
Non-Refundable Fees
Medium
Explanation:
- Item 18 states that the initial franchise fee, Development Fee, Operations Onboarding & First Studio Opening Support Fee, and Non-Refundable Training Fee are non-refundable under any circumstances. This presents a financial risk if the franchisee decides to terminate the agreement prematurely or if the relationship with the franchisor deteriorates.
Potential Mitigations:
- Carefully review the Franchise Agreement and understand the terms and conditions before signing. Seek legal counsel to ensure you fully comprehend the implications of non-refundable fees.
- Conduct thorough due diligence on the franchisor and the Deka Lash brand to minimize the risk of unforeseen issues that might lead to early termination.
FDD Citations:
- Item 18: "I acknowledge that the initial franchise fee and/or the Development Fee... is fully earned at the time of execution and that is NOT REFUNDABLE UNDER ANY CIRCUMSTANCES."
Reliance on Franchise Broker/Consultant
Medium
Explanation:
- Item 17 discloses that franchise brokers, consultants, or referral sources may be involved in the sales process and that they represent the franchisor, not the prospective franchisee. This can create a potential conflict of interest, as the broker's primary motivation may be to close the deal, not necessarily to act in the franchisee's best interest.
Potential Mitigations:
- Conduct independent research on the Deka Lash franchise and do not solely rely on information provided by brokers or consultants.
- Seek advice from an independent franchise attorney or consultant who can provide unbiased guidance and represent your interests.
FDD Citations:
- Item 17: "I acknowledge that one or more franchise brokers... may be paid in relation to selling me this franchise and I acknowledge that such...represent the franchisor and not me."
No Repurchase Guarantee
Low
Explanation:
- Item 13 states that the franchisor makes no representation that they will buy back any products, supplies, territories, or equipment purchased in connection with the franchise. This means the franchisee bears the full risk of liquidating these assets if they decide to exit the business.
Potential Mitigations:
- Develop a comprehensive exit strategy that includes plans for selling or transferring ownership of the franchise, equipment, and inventory.
- Research the resale market for similar businesses and equipment to understand potential liquidation values.
FDD Citations:
- Item 13: "I acknowledge that... the franchisor has made no representation that they will buy back any products, supplies, territories or equipment."
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FDD Year: 2024
Uploaded: 8/25/2025
FDD Documents
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