What happens if an Itan employee engages in a Prohibited Activity, and how does it affect the Restricted Period?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
If you engage in a Prohibited Activity during the Restricted Period (other than having an interest in a Competing Business permitted by this Section) your Restricted Period will be extended by the period of time you engaged in the Prohibited Activity.
Any such extension of time will not be construed as a waiver of your breach or impair any of our rights or remedies relating to the breach.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, if an employee engages in a Prohibited Activity during the Restricted Period (with a specific exception), the Restricted Period will be extended. The extension will last for the same amount of time that the employee was engaged in the Prohibited Activity. This extension does not excuse the breach of contract, nor does it affect Itan's rights or remedies related to the breach.
Notably, an employee is allowed to have an interest in a Competing Business during the Restricted Period if that business is not located in the Restricted Territory. However, engaging in other Prohibited Activities, such as owning or operating a Competing Business within the Restricted Territory, would trigger the extension of the Restricted Period.
It is important to understand what constitutes a "Prohibited Activity" and the scope of the "Restricted Period" and "Restricted Territory" as defined in the agreement. These definitions will determine what actions are considered a breach and what the consequences will be. Franchisees should carefully review these sections of the Franchise Agreement and related documents to fully understand their obligations and restrictions.