Considering the restrictions on suppliers in Item 8, what are the procedures for an Itan franchisee to request a refund or credit for defective products or services, impacting their obligations in Item 9?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
ii) a supplier's termination of its relationship with us or refusal to supply goods or services to our franchisees may cause significant harm to us and our franchisees. Accordingly, you agree to promptly pay all amounts owed to system suppliers except as otherwise permitted by this Section. If you have a bona-fide dispute with a supplier that you believe justifies non-payment or partial payment, you must promptly notify the supplier of the particulars of your Claim and diligently pursue resolution of the Claim or prosecution of appropriate legal action. Any trade debt that remains unpaid more than 30 days after its due date constitutes a material breach of this Agreement unless, before the end of the 30-day period: (i) you and the supplier agree to alternative payment terms; or (ii) you initiate appropriate legal action to contest the trade debt.
- (e) Supplier Payments. If we receive rebates or other consideration from suppliers based on your purchases we may either: (i) pass such amounts through to you; or (b) deposit such amounts into the brand and system development fund.
- (f) Disclaimer of Liability. Provided that we designate or approve system suppliers in good faith, we have no liability to you for their acts, errors or omissions including, without limitation, defective or tainted goods, delayed delivery or inability to meet demand. With respect to goods purchased from us or our affiliate, you acknowledge that we or our affiliate purchase the goods from third-party manufacturers or suppliers and resell them to you as a convenience. If you have any type of Claim relating to the purchase of goods or services from a system supplier, your sole recourse shall be against the supplier. If we or our affiliate are the supplier, your sole recourse shall be against the manufacturer or supplier from whom we or our affiliate acquired the goods unless both: (i) the Claim arises from our (or our affiliate's) failure to supply the
goods in breach of our obligations under this Agreement; and (ii) our (or our affiliate's) failure to supply the goods is not caused by a Force Majeure event. We and our affiliates make no warranties or representations and expressly disclaim all warranties and representations, including the implied warranties of merchantability and fitness for a particular purpose, with respect to goods or services you purchase from system suppliers.
11.8. Equipment Maintenance & Changes. You must maintain your equipment in good condition and promptly replace or repair equipment that is damaged, worn-out or obsolete. We may require that you change your equipment. Our right to require these changes is critical to our ability to administer and change the System and you must comply with these changes within the time period we reasonably specify.
11.9. Technology Systems.
- (a) Generally. You must acquire and utilize all Technology Systems we require from time to time. Technology Systems may relate to matters such as: purchasing; pricing;
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, Item 23 outlines the procedures for handling payment disputes with system suppliers. If an Itan franchisee has a legitimate dispute with a supplier, they must promptly notify the supplier with the details of their claim and diligently pursue a resolution or legal action. Failure to pay a system supplier on time could jeopardize the supplier's relationship with Itan and other franchisees. Any trade debt that remains unpaid more than 30 days after the due date constitutes a material breach of the Franchise Agreement, unless alternative payment terms are agreed upon or legal action is initiated to contest the debt within that 30-day period.
Item 8 states that franchisees must purchase or lease certain goods and services from approved or designated suppliers. Nearly 95% of the total purchases and leases to establish a Salon and 85% of ongoing operating expenses will consist of source-restricted goods or services. If a franchisee wishes to use a non-approved supplier, they must submit a written request for approval, product samples, and any additional required information. The supplier must also meet Itan's minimum insurance, indemnification, and confidentiality requirements and allow facility inspections. Itan will notify the franchisee of their decision within 30 days of receiving all necessary information.
Item 23 also includes a disclaimer of liability, stating that Itan is not liable for the acts, errors, or omissions of system suppliers, including defective goods or delayed delivery, provided that Itan designates or approves the suppliers in good faith. If a franchisee has a claim related to the purchase of goods or services from a system supplier, their sole recourse is against that supplier. This means that Itan franchisees must resolve issues regarding defective products or services directly with the supplier, following the notification and dispute resolution procedures outlined in the Franchise Agreement. Item 9 lists the franchisee's obligations, and sections FA: 6.2, 6.7 & 11.7 and ADA: Not Applicable relate to ongoing product/service purchases, referencing Item 8.