What action will Itan take before seeking injunctive relief for a breach of Section 3 of the agreement?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
ope of the Restricted Territory and/or reducing the scope of any other covenant imposed upon you under §3 of this Agreement to ensure the covenants are enforceable under applicable Law.
- (e) Breach. You agree t
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, prior to seeking injunctive relief for a breach of Section 3 of the agreement, Itan will notify the franchisee of their intent to seek such relief. However, Itan is not required to post a bond. If a court requires Itan to post a bond despite their agreement to the contrary, the bond amount will not exceed $1,000.
This notification allows the franchisee an opportunity to address the breach before Itan pursues legal action. Injunctive relief is a court order that requires the franchisee to stop a specific action, which in this case would be a violation of Section 3 of the agreement. Section 3 typically covers brand protection covenants, such as intellectual property, confidential information, and unfair competition.
The fact that Itan does not need to post a bond provides a financial benefit to Itan, as bonds can be costly. However, if a court does require a bond, the maximum amount is capped at $1,000, which provides some cost certainty. This is a fairly standard practice in franchising, as franchisors often seek injunctive relief to protect their brand standards and intellectual property.
It is important for a prospective Itan franchisee to carefully review Section 3 of the franchise agreement to understand what actions could lead to a breach and the potential consequences, including injunctive relief. Franchisees should also be aware of the notification process and the potential for a bond, even if Itan is not initially required to post one.