What happens if an Itan franchisee is convicted of certain crimes?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
- The following is added at the end of Item 3 of the Disclosure Document:
Except as provided above, with regard to the franchisor, its predecessor, a person identified in Item 2, or an affiliate offering franchises under the franchisor's principal trademark:
- A. No such party has an administrative, criminal or civil action pending against that person alleging: a felony, a violation of a franchise, antitrust, or securities law, fraud, embezzlement, fraudulent conversion, misappropriation of property, unfair or deceptive practices, or comparable civil or misdemeanor allegations.
- B. No such party has pending actions, other than routine litigation incidental to the business, which are significant in the context of the number of franchisees and the size, nature or financial condition of the franchise system or its business operations.
- C. No such party has been convicted of a felony or pleaded nolo contendere to a felony charge or, within the 10 year period immediately preceding the application for registration, has been convicted of or pleaded nolo contendere to a misdemeanor charge or has been the subject of a civil action alleging: violation of a franchise, antifraud, or securities law; fraud; embezzlement; fraudulent conversion or misappropriation of property; or unfair or deceptive practices or comparable allegations.
- D. No such party is subject to a currently effective injunctive or restrictive order or decree relating to the franchise, or under a Federal, State, or Canadian franchise, securities, antitrust, trade regulation or trade practice law, resulting from a concluded or pending action or proceeding brought by a public agency; or is subject to any currently effective order of any national securities association or national securities exchange, as defined in the Securities and Exchange Act of 1934, suspending or expelling such person from membership in such association or exchange; or is subject to a currently effective injunctive or restrictive order relating to any other business activity as a result of an action brought by a public agency or department, including, without limitation, actions affecting a license as a real estate broker or sales agent.
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- The following is added to the end of Item 4 of the Disclosure Document:
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 36–39)
What This Means (2025 FDD)
Based on the 2025 Itan Franchise Disclosure Document, Item 23 references Item 3 of the Disclosure Document, stating that no party (including the franchisor, its predecessors, individuals identified in Item 2, or affiliates offering franchises under the franchisor's trademark) has been convicted of a felony or pleaded nolo contendere to a felony charge. This also applies to misdemeanor charges or civil actions alleging violations of franchise, antifraud, or securities laws; fraud; embezzlement; fraudulent conversion or misappropriation of property; or unfair or deceptive practices within the 10-year period before the franchise registration application.
Furthermore, Item 23 states that no party is subject to a currently effective injunctive or restrictive order or decree relating to the franchise, or under Federal, State, or Canadian franchise, securities, antitrust, trade regulation or trade practice law. This includes orders from national securities associations or exchanges suspending or expelling a person from membership, or injunctive or restrictive orders relating to any other business activity resulting from actions by a public agency, such as those affecting a real estate license.
In practical terms, this means Itan assures prospective franchisees that neither the company nor its key personnel have a recent history of criminal convictions or civil actions related to fraud, securities violations, or unfair business practices. This provides a level of assurance that the company has not faced significant legal challenges related to unethical or illegal business conduct. However, this section focuses on the franchisor and related parties, not the franchisee. The FDD does not describe the consequences if a franchisee is convicted of a crime.