What are the consequences if an Itan franchisee's lease is terminated due to their default?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
| THE FRANCHISE RELATIONSHIP | ||
|---|---|---|
| PROVISION S | ||
| a. Length of | FA: 1 (definition of Term) | Term is equal to 10 years. |
| franchise term | & 4.1 | |
| ADA: 1 (definition of | Term expires on the opening date listed in the development schedule for | |
| Term) | the last Salon you are required to develop. | |
| b. Renewal or extension of the term | FA: 4.1 & 4.2 | If you meet our conditions for renewal, you can enter into 2 consecutive successor franchise agreements. Each renewal term will be 5 years. The parties may mutually agree to further renewals but neither party is obligated to do so (subject to state law). |
| ADA: Not Applicable | No renewal rights. Parties must enter into a new area development agreement in order to grant you additional development rights. | |
| c. Requirements for you to renew or extend | FA: 4.1 & 4.2 | You must: not be in default; give us timely notice; sign then-current form of franchise agreement; sign general release (subject to state law); pay renewal fee; remodel Salon and upgrade furniture, fixtures and equipment to current standards; and extend lease term. If you renew, you may be required to sign a contract with materially different terms and conditions than the original contract. |
| ADA: Not Applicable | No renewal rights. Parties must enter into a new area development agreement in order to grant you additional development rights. | |
| d. Termination by | FA: 20.1 | You can terminate if we default and fail to timely cure. |
| you | ||
| ADA: Not Applicable | You can terminate under any grounds permitted by law. | |
| e. Termination by | FA: 20.3 | We can terminate without cause if you and we mutually agree to |
| us without cause | terminate. | |
| ADA: Not Applicable | Not applicable | |
| THE FRANCHISE RELATIONSHIP | ||
| Provision | SECTIONS IN AGREEMENT | SUMMARY |
| f. Termination by | FA: 20.2 | W |
| us with cause | ADA: 9.1 | We can terminate if you default. |
| g. "Cause" defined - curable defaults | FA: 20.2 | You have the following cure periods: (a) 10 days for financial defaults; and (b) 30 days for any other default (other than a default described below under "non-curable defaults"). |
| - curable defaults | ADA: 9.1 | You have 30 days to cure any default, other than defaults described below under "non-curable defaults". |
| h. "Cause" defined - non-curable defaults | FA: 20.2 | The following defaults cannot be cured: insolvency, bankruptcy or seizure of assets; failure to successfully complete training; failure to find approved site, secure lease or open in timely manner; abandonment; failure to maintain required license or permit; conviction of certain crimes or subject of certain administrative actions; violation of material law; commission of act that may adversely affect reputation of System or Marks; health or safety hazards; material misrepresentations; 2 nd underreporting of amounts due by at least 3%; unauthorized Transfers; unauthorized use of our intellectual property; violation of brand protection covenant; breach of Franchise Owner Agreement; breach of legal compliance representations; failure to notify us of a matter described in §15.6; termination of lease due to your default; 3 or more default notices in a 12-month period; or termination of any other agreement between you (or your affiliate) and us (or our affiliate) due to your default. However, termination of an ADA due to breach of the development schedule is not grounds for termination of any Franchise Agreement that is otherwise in good standing. |
| ADA: 9.1 | If we terminate a franchise agreement due to your default, we may terminate the ADA without opportunity to cure. | |
| i. Your obligations | FA: 21.1 | Obligations include: remove trade dress and alter premises to eliminate any resemblance to a Salon; cease use of intellectual property; return Manual and branded materials; assign telephone numbers, listings and domain names; assign customer information and accounts; cancel fictitious names; comply with data retention policies; and pay amounts due (also see "r", below). |
| on termination/ | ||
| non-renewal | ||
| ADA: Not Applicable | The ADA does not impose any post-term obligations on you. | |
| j. Assignment of | FA: 19.1 | No madeintia a comunicate de casica |
| contract by us | ADA: 8.1 | No restriction on our right to assign. |
| k. "Transfer" by | FA: 1 (definition of Transfer) & 19.2 | |
| you – definition | ADA: 1 (definition of Transfer) & 8.2 | Includes ownership change or transfer of contract or assets. |
| Our approval of transfer by you | FA: 1 (definition of Permitted Transfer), 19.2 & 19.3 | You may engage in a Permitted Transfer (defined in Note 2 in Item 6) without approval. We must approve other Transfers but will not |
| transier by you | ADA: 1 (definition of Permitted Transfer), 8.2 & 8.3 | unreasonably withhold approval. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 36–39)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, if a franchisee's lease is terminated due to their default, Itan has the right, but not the obligation, to terminate the Franchise Agreement. This is considered a non-curable default, meaning the franchisee does not have an opportunity to remedy the situation and prevent termination.
This situation is outlined as one of several events that constitute material events of default and "good cause" for termination, effective immediately upon delivery of a termination notice from Itan. The franchisee loses all rights under the Franchise Agreement, including the right to operate their salon.
In addition, the landlord agrees that the expiration or termination of the Franchise Agreement shall constitute a default under the Lease, giving Itan the right, but not the obligation, to cure such default by succeeding to Tenant's interests under the Lease. Itan also retains the right to cure the franchisee's default under the lease, and may commence occupancy of the premises. Itan may then assign the lease to another franchisee or an entity they control, subject to the landlord's approval, which cannot be unreasonably withheld or delayed.