What consideration is given for Itan's consent to the transfer of the franchise agreement?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
(j) you and your Owners sign a General Release;
(k) you agree to subordinate the transferee's financial obligations to you to the transferee's financial obligations owed to us pursuant to the franchise agreement (we may require you to enter into a written subordination agreement);
(l) we choose not to exercise our right of first refusal described in §19.5; and
(m) you or the transferring Owner, as applicable, and the transferee satisfy all other conditions we reasonably require as a condition to approval of the Transfer.
Our consent to a Transfer shall not constitute a waiver of any Claims we have against the transferor or our right to demand the transferee comply with all terms of the franchise agreement.
- **19.3.
Permitted Transfers.** You may engage in a Permitted Transfer without our prior approval, but you must: (a) give us at least 10 days' prior notice; and (b) upon our request, cause the former Franchisee Entity to sign a corporate guarantee in the format we require to secure performance of the new Franchisee Entity's financial obligations under all Definitive Agreements (if the Permitted Transfer results in a new Franchisee Entity).
You and the Owners (and transferee) must sign all documents we reasonably request to effectuate and document the Permitted Transfer.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, Itan's consent to a franchise transfer is contingent upon several conditions being met. These conditions include the franchisee and their owners signing a General Release, which likely involves releasing Itan from any potential liabilities or claims related to the franchise agreement. Additionally, the franchisee must agree to subordinate the transferee's financial obligations to the franchisee's financial obligations owed to Itan, and Itan may require a written subordination agreement to formalize this arrangement.
Furthermore, Itan retains the right of first refusal, meaning they have the option to purchase the franchise themselves before it is transferred to another party. If Itan chooses not to exercise this right, the transfer can proceed, provided that both the transferring party and the transferee satisfy all other conditions that Itan reasonably requires for approval of the transfer. These additional conditions are not explicitly detailed but provide Itan with flexibility to ensure the transferee is a suitable franchisee.
It is important to note that Itan's consent to a transfer does not waive any claims they may have against the transferor, nor does it diminish their right to demand full compliance with the franchise agreement from the transferee. This ensures that Itan's interests are protected throughout the transfer process and that the new franchisee adheres to all the original terms and conditions.
In certain situations, a Permitted Transfer can occur without Itan's prior approval, provided that Itan receives at least 10 days' prior notice. Additionally, upon Itan's request, the former Franchisee Entity must sign a corporate guarantee to secure the new Franchisee Entity's financial obligations under all Definitive Agreements if the Permitted Transfer results in a new Franchisee Entity. The franchisee, owners, and transferee must also sign all documents that Itan reasonably requests to effectuate and document the Permitted Transfer.