What constitutes an unauthorized transfer that could lead to termination of the Itan franchise agreement?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
ies created by this Agreement are personal to you and the Owners. We are granting you franchise rights in reliance upon the character, skill, attitude, business ability and financial resources of you and your Owners. Because this Agreement is a personal services contract, neither you nor any Owner may engage in a Transfer (other than a Permitted Transfer) without our prior approval. Any Transfer (other than a Permitted Transfer) without our approval is void and constitutes a breach of this Agreement. We will not unreasonably withhold our approval of a proposed Transfer if all of the following conditions are satisfied:
- (a) we believe the proposed transferee has sufficient business experience, aptitude and financial resources to own and operate a Salon and meets our minimum criteria for franchisees;
- (b) you and your affiliates and Owners are in full compliance with all Definitive Agreements;
- (c) the transferee's owners successfully complete, or make arrangements to attend, the initial training program and the transferee pays any applicable training fee (the transfer fee covers training for one (1) Person);
- (d) your landlord consents to the assignment of your lease to the transferee, or the transferee is diligently pursuing an approved substitute location within the Site Selection Area;
- (e) the transferee and its owners obtain all licenses and permits required by applicable Law to own and operate the Salon;
- (f) the transferee: (i) agrees to discharge and guarantee your obligations under this Agreement and any other Business contracts (including customer contracts/obligations and supplier contracts); and (ii) signs any agreement we require to confirm the foregoing;
- (g) the transferee and its owners sign our then-current form of franchise agreement (unless we instruct you to assign this Agreement to the transferee) except that: (i) the Term and renewal term(s) shall be the Term and renewal term(s) remaining under this Agreement unless we specify otherwise; and (ii) the transferee need not pay a separate initial franchise fee;
- (h) the transferee agrees to remodel the Salon and upgrade all furniture, fixtures and equipment to conform to our then-current standards and specifications (these changes m
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, a transfer without Itan's approval, other than a Permitted Transfer, is considered a breach of the Franchise Agreement and is void.
Itan will not unreasonably withhold approval of a proposed transfer if certain conditions are met. These conditions include believing the proposed transferee has sufficient business experience, aptitude, and financial resources to own and operate a Salon and meets Itan's minimum criteria for franchisees. Additionally, the franchisee, its affiliates, and owners must be in full compliance with all Definitive Agreements. The transferee's owners must also successfully complete the initial training program, and the transferee must pay any applicable training fee. The landlord must consent to the assignment of the lease to the transferee, or the transferee must be diligently pursuing an approved substitute location within the Site Selection Area.
Furthermore, the transferee and its owners must obtain all licenses and permits required by applicable law to own and operate the Salon. The transferee must also agree to discharge and guarantee the franchisee's obligations under the Franchise Agreement and any other Business contracts. The transferee and its owners must sign Itan's then-current form of franchise agreement, with some exceptions regarding the term and renewal terms, and the transferee need not pay a separate initial franchise fee. The transferee must agree to remodel the Salon and upgrade all furniture, fixtures, and equipment to conform to Itan's then-current standards and specifications within a specified timeframe. Finally, the franchisee or the transferee must pay Itan a $10,000 transfer fee to defray expenses related to the Transfer, and the franchisee and its Owners must sign a General Release.
In practical terms, this means that an Itan franchisee cannot simply sell or transfer their franchise to someone else without first obtaining Itan's approval and ensuring that the proposed transferee meets all of the specified requirements. Failure to comply with these requirements could result in the transfer being deemed void and a breach of the Franchise Agreement, potentially leading to termination. The $10,000 transfer fee, along with the obligation to remodel the Salon, represents a significant cost that a prospective transferee must consider.