What are some examples of 'good cause' for Itan to refuse a transfer of ownership?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
- (g) A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise, except for good cause.
This subdivision does not prevent a franchisor from exercising a right of first refusal to purchase the franchise.
Good cause shall include, but is not limited to:
(v) The failure of the proposed transferee to meet the franchisor's then current reasonable qualifications or standards.
(vi) The fact that the proposed transferee is a competitor of the franchisor or subfranchisor.
(vii) The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.
(viii) The failure of the franchisee or proposed transferee to pay any sums owing to the franchisor or to cure any default in the franchise agreement existing at the time of the proposed transfer.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, Itan can refuse a transfer of ownership of a franchise for 'good cause'. This includes several specific situations that are outlined in the document.
Itan may refuse a transfer if the proposed transferee does not meet Itan's current qualifications or standards. This means Itan has the right to ensure that anyone taking over a franchise meets their requirements for franchisees. Itan can also refuse a transfer if the proposed transferee is a competitor, preventing potential conflicts of interest and protecting Itan's market position. Additionally, if the proposed transferee is unwilling to agree in writing to comply with all lawful obligations, Itan can deny the transfer, ensuring adherence to the franchise agreement.
Furthermore, Itan can refuse a transfer if the franchisee or proposed transferee has not paid all sums owed to Itan or has failed to correct any existing default in the franchise agreement at the time of the proposed transfer. This protects Itan's financial interests and ensures compliance with the agreement. These conditions provide Itan with the ability to maintain standards and protect its interests when a franchisee seeks to transfer ownership.