What deductions can Itan make from the purchase price at closing?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
We may deduct from the purchase price: (i) any amounts you owe us or our affiliates under any Definitive Agreements including, if applicable, liquidated damages and other damages owed (other than lost profits) as a result of our termination of this Agreement due to your breach; and (ii) the amount of any liabilities we assume on your behalf, including future rent and pre-paid liabilities (e.g., gift cards or "package" purchases).
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, when Itan purchases the assets of a franchise location, they are permitted to make certain deductions from the final purchase price at the time of closing. Specifically, Itan can deduct any outstanding amounts that the franchisee owes to Itan or its affiliates under any definitive agreements. This includes, if applicable, any liquidated damages or other damages owed, excluding lost profits, resulting from the termination of the agreement due to the franchisee's breach.
Additionally, Itan can deduct the amount of any liabilities that Itan assumes on behalf of the franchisee. This includes future rent obligations and prepaid liabilities, such as gift cards or "package" purchases that customers have already paid for but the services have not yet been rendered.
This clause protects Itan from financial losses due to franchisee debt or assumed liabilities. A prospective franchisee should carefully review the Asset Purchase Agreement and related documents to fully understand the potential deductions that Itan could make at closing, and factor these potential deductions into their financial planning.