What are some examples of non-curable defaults that could lead to termination of the Itan franchise agreement?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
| THE FRANCHISE RELATIONSHIP | ||
|---|---|---|
| PROVISION S | ||
| a. Length of | FA: 1 (definition of Term) | Term is equal to 10 years. |
| franchise term | & 4.1 | |
| ADA: 1 (definition of | Term expires on the opening date listed in the development schedule for | |
| Term) | the last Salon you are required to develop. | |
| b. Renewal or extension of the term | FA: 4.1 & 4.2 | If you meet our conditions for renewal, you can enter into 2 consecutive successor franchise agreements. Each renewal term will be 5 years. The parties may mutually agree to further renewals but neither party is obligated to do so (subject to state law). |
| ADA: Not Applicable | No renewal rights. Parties must enter into a new area development agreement in order to grant you additional development rights. | |
| c. Requirements for you to renew or extend | FA: 4.1 & 4.2 | You must: not be in default; give us timely notice; sign then-current form of franchise agreement; sign general release (subject to state law); pay renewal fee; remodel Salon and upgrade furniture, fixtures and equipment to current standards; and extend lease term. If you renew, you may be required to sign a contract with materially different terms and conditions than the original contract. |
| ADA: Not Applicable | No renewal rights. Parties must enter into a new area development agreement in order to grant you additional development rights. | |
| d. Termination by | FA: 20.1 | You can terminate if we default and fail to timely cure. |
| you | ||
| ADA: Not Applicable | You can terminate under any grounds permitted by law. | |
| e. Termination by | FA: 20.3 | We can terminate without cause if you and we mutually agree to |
| us without cause | terminate. | |
| ADA: Not Applicable | Not applicable | |
| THE FRANCHISE RELATIONSHIP | ||
| Provision | SECTIONS IN AGREEMENT | SUMMARY |
| f. Termination by | FA: 20.2 | W |
| us with cause | ADA: 9.1 | We can terminate if you default. |
| g. "Cause" defined - curable defaults | FA: 20.2 | You have the following cure periods: (a) 10 days for financial defaults; and (b) 30 days for any other default (other than a default described below under "non-curable defaults"). |
| - curable defaults | ADA: 9.1 | You have 30 days to cure any default, other than defaults described below under "non-curable defaults". |
| h. "Cause" defined - non-curable defaults | FA: 20.2 | The following defaults cannot be cured: insolvency, bankruptcy or seizure of assets; failure to successfully complete training; failure to find approved site, secure lease or open in timely manner; abandonment; failure to maintain required license or permit; conviction of certain crimes or subject of certain administrative actions; violation of material law; commission of act that may adversely affect reputation of System or Marks; health or safety hazards; material misrepresentations; 2 nd underreporting of amounts due by at least 3%; unauthorized Transfers; unauthorized use of our intellectual property; violation of brand protection covenant; breach of Franchise Owner Agreement; breach of legal compliance representations; failure to notify us of a matter described in §15.6; termination of lease due to your default; 3 or more default notices in a 12-month period; or termination of any other agreement between you (or your affiliate) and us (or our affiliate) due to your default. However, termination of an ADA due to breach of the development schedule is not grounds for termination of any Franchise Agreement that is otherwise in good standing. |
| ADA: 9.1 | If we terminate a franchise agreement due to your default, we may terminate the ADA without opportunity to cure. | |
| i. |
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, certain defaults are considered so severe that they cannot be cured, leading to immediate termination of the franchise agreement. These non-curable defaults include situations such as insolvency, bankruptcy, or seizure of assets, which indicate a severe financial crisis. Failure to complete the initial training program successfully or failing to secure an approved site, lease, or open the salon in a timely manner also constitute non-curable defaults, highlighting the importance of meeting Itan's initial setup requirements.
Additional non-curable defaults include failing to maintain required licenses or permits, reflecting the franchisee's responsibility to adhere to legal and regulatory standards. Conviction of certain crimes or being subject to specific administrative actions, violating material laws, or committing any act that could adversely affect the reputation of the Itan system or its trademarks are also non-curable defaults. Creating health or safety hazards, making material misrepresentations, or a second instance of underreporting amounts due by at least 3% are further examples of actions that can lead to immediate termination.
Furthermore, unauthorized transfers of the franchise, unauthorized use of Itan's intellectual property, violating brand protection covenants, breaching a Franchise Owner Agreement, or breaching legal compliance representations are considered non-curable. Failing to notify Itan of a matter described in §15.6 of the franchise agreement, termination of the lease due to the franchisee's default, receiving three or more default notices within a 12-month period, or termination of any other agreement between the franchisee (or their affiliate) and Itan (or its affiliate) due to the franchisee's default are also non-curable defaults. However, it is important to note that the termination of an Area Development Agreement (ADA) due to a breach of the development schedule does not automatically lead to the termination of a franchise agreement that is otherwise in good standing.
These stipulations underscore the critical importance of adhering to Itan's standards, legal requirements, and contractual obligations. Prospective franchisees should carefully consider these non-curable defaults and ensure they have the resources and commitment to meet these requirements to avoid immediate termination of their franchise agreement.