What conditions must be met for a 'Transfer' to be considered a 'Permitted Transfer' under the Itan area development agreement?

According to Itan's 2025 Franchise Disclosure Document, a 'Permitted Transfer' is defined under specific conditions within the area development agreement. A transfer qualifies as 'Permitted' if it occurs either between existing owners or from the owners to a new Developer Entity, provided that the existing owners collectively retain 100% ownership and control of the Equity Interests in the new entity.

However, there's a critical stipulation: a 'Permitted Transfer' does not include any transfer that results in the Managing Owner holding less than 20% of the Equity Interests in the Development Business or Developer Entity. This condition ensures that the managing owner maintains a significant stake in the business, likely to preserve their commitment and oversight.

It is important for prospective Itan area developers to understand these conditions, as any transfer not meeting these criteria would require prior approval from Itan, and failure to obtain such approval could result in a breach of the area development agreement. This definition helps to maintain the integrity and operational consistency of the Itan franchise system by ensuring that control and ownership remain within specified parameters.