If Itan (or its affiliate) terminates any Definitive Agreement due to a default by the franchisee, can Itan terminate the franchise agreement?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
9. TERMINATION
- 9.1. By Us. We may terminate this Agreement, effective upon delivery of a notice of termination, for any of the following reasons, all of which constitute material events of default and "good cause" for termination, and without opportunity to cure except for any cure period expressly set forth below:
- (i) if we terminate any Definitive Agreement due to a default committed by you or one of your Owners or affiliates; or
- (ii) if you (or an Owner) breach any provision of this Agreement and fail to cure within 30 days after receipt of a default notice.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, Itan has the right to terminate the Franchise Agreement if Itan (or its affiliate) terminates any Definitive Agreement due to a default committed by the franchisee, one of the franchisee's owners, or affiliates. This termination is effective immediately upon delivery of a termination notice.
This clause means that if a franchisee enters into any agreement with Itan or its affiliates (other than an area development agreement) and then defaults on that agreement, Itan can terminate the franchise agreement itself. This is a significant point for prospective franchisees, as it broadens the scope of what could lead to a franchise termination beyond just the standard breaches of the franchise agreement.
It is important for a prospective Itan franchisee to understand what constitutes a "Definitive Agreement" and what actions could trigger a default under those agreements. This provision underscores the importance of fulfilling all contractual obligations with Itan and its affiliates to avoid potential franchise termination.