Does the Itan franchise agreement allow for approvals by silence?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Right to Cure. If Tenant defaults under the Lease, Franchisor has the right (but not the duty) to cure such default within 15 days following the expiration of any applicable cure period. In such event, Franchisor may immediately commence occupancy of the Premises as the tenant under the Lease without obtaining Landlord's or Tenant's consent. Franchisor may thereafter assign the Lease to another iTAN franchisee or to an entity owned and/or controlled by Franchisor. If it does, Franchisor must first obtain Landlord's written approval of the assignee. Landlord, however, must neither unreasonably withhold nor delay its approval thereof. Landlord will acknowledge any such assignment in writing. No assignment permitted under this Section is subject to any assignment or similar fee or will cause any rental acceleration.
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- Right to Assign. At any time, including, without limitation, upon the expiration or termination of the Franchise Agreement, and without Landlord's prior consent, Tenant may assign the Lease to Franchisor. In such event, Franchisor may thereafter assign the Lease to another iTAN franchisee or to an entity owned and/or controlled by Franchisor. If it does, Franchisor must first obtain Landlord's written approval of the assignee. Landlord, however, must neither unreasonably withhold nor delay its approval thereof. Landlord will acknowledge any such assignment in writing. No assignment permitted under this Section is subject to any assignment or similar fee or will cause any rental acceleration.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
Based on the 2025 Itan Franchise Disclosure Document, the franchise agreement addresses the concept of approval by silence in the context of lease assignments. Specifically, if Itan, as the franchisor, needs the landlord's approval for an assignment of the lease, the landlord cannot unreasonably withhold or delay that approval. This implies that there is an expectation of a response, and unreasonable delay is not acceptable.
This clause protects Itan's interests by ensuring that landlords act reasonably and promptly when considering lease assignments. It prevents landlords from hindering the transfer of the lease to another franchisee or an entity controlled by Itan. The landlord must also acknowledge any such assignment in writing, further solidifying the requirement for active communication and preventing tacit approval.
For a prospective Itan franchisee, this is a beneficial provision. It ensures that the franchisor can efficiently manage lease assignments, which can be crucial in various scenarios, such as transferring the franchise to a new owner or restructuring the business. The requirement for the landlord to act reasonably and provide written acknowledgment adds a layer of security and transparency to the process.