Does the Itan agreement prevent Itan from making wholesale sales within my territory?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
We reserve the right to sell, and license others to sell, competitive or identical goods and services (either under the Marks or different trademarks) through Alternative Channels of Distribution, including within your territory and development territory, if applicable. An "Alternative Channel of Distribution" means any channel of distribution other than retail sales made to customers while present at a Salon. Examples of Alternative Channels of Distribution include:
- sales through direct marketing, such as over the Internet or through catalogs or telemarketing
- sales through retail stores that do not operate under the Marks, such as grocery stores, convenience stores, spas and tanning salons (other than spas or tanning salons operating under the Marks)
sales made at wholesale
You are not entitled to any compensation for sales that take place through Alternative Channels of Distribution.
Source: Item 12 — TERRITORY (FDD pages 31–33)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the franchise agreement does not prevent Itan from making wholesale sales within a franchisee's territory. Itan retains the right to sell goods and services through what they define as "Alternative Channels of Distribution," even within a franchisee's territory. These alternative channels include sales made at wholesale. This means that Itan can engage in wholesale activities within your territory, potentially competing with your salon's sales.
This aspect of the agreement has significant implications for prospective franchisees. While franchisees operate their salons, Itan can also supply products to other businesses, such as retail stores, spas, or tanning salons (excluding those operating under Itan's marks), within the same territory. The FDD explicitly states that franchisees are not entitled to any compensation for sales that take place through these Alternative Channels of Distribution. Therefore, franchisees should be aware that Itan's wholesale activities could impact their revenue, and they will not receive any direct benefit from these sales.
It is important for potential Itan franchisees to fully understand the scope of these alternative channels and how they might affect their business. While Itan grants a territory, it does not guarantee exclusive rights to all sales within that territory. Prospective franchisees should inquire about Itan's plans for wholesale distribution in their target area and carefully consider the potential impact on their salon's profitability. Understanding these competitive dynamics is crucial for making an informed investment decision.