What is Itan entitled to if an employee breaches Section 3 of the agreement?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
re reasonable we may, upon written notice to you, unilaterally modify the brand protection covenants in §3 of this Agreement by limiting the scope of the Prohibited Activities, narrowing the definition of a Competing Business, shortening the duration of the Restricted Period, reducing the geographic scope of the Restricted Territory and/or reducing the scope of any other covenant imposed upon you under §3 of this Agreement to ensure the covenants are enforceable under applicable Law.
- (e) Breach. You agree that: (i) any failure to comply with §3 is likely to cause substantial and irreparable damage to us and/or other franchisees for which there is no adequate remedy at law; and (ii) we are entitled to injunctive relief if you breach §3 tog
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, if a franchisee's employee fails to comply with Section 3 of the agreement, which pertains to brand protection covenants, Itan is entitled to injunctive relief. This means Itan can seek a court order to stop the employee's actions that violate the agreement. Additionally, Itan is entitled to any other relief available at equity or law. This could include monetary damages to compensate for the harm caused by the breach and specific performance, which compels the employee to fulfill their obligations under the agreement.
Itan will notify the franchisee if they intend to seek injunctive relief, and they are not required to post a bond. However, if a court mandates a bond, the bond amount will not exceed $1,000, even if Itan and the franchisee mutually agreed that no bond should be necessary. The FDD emphasizes that any failure to comply with Section 3 is likely to cause substantial and irreparable damage to Itan and its other franchisees, highlighting the importance of these brand protection covenants.
The remedies available to Itan are not exclusive, meaning they can be combined with other remedies available under the agreement, at law, or in equity. This provides Itan with a range of options to address the breach and protect its interests. The agreement also states that the franchisee acknowledges that any breach of Section 3 is likely to cause substantial and irreparable damage to Itan and other franchisees, reinforcing the significance of adhering to these covenants.
This clause is fairly standard in franchise agreements, as franchisors need to protect their brand, trade secrets, and customer relationships. The ability to seek injunctive relief is particularly important because the damage caused by a breach of confidentiality or non-compete obligations can be difficult to quantify in monetary terms. The relatively low bond amount, if required, is also a benefit for Itan, as it reduces the financial burden of pursuing legal action.