If applicable law prevents an Itan franchisee from assigning ownership of an Improvement, what must they do?

According to Itan's 2025 Franchise Disclosure Document, franchisees are generally required to assign all rights to any Improvement they develop to Itan or its designee without any charge, including the right to grant sublicenses. However, if applicable law prevents the franchisee from assigning ownership of an Improvement to Itan, the franchisee must perpetually license the Improvement to Itan, free of charge. This license grants Itan full rights to use, commercialize, and sublicense the Improvement.

This means that even if a franchisee cannot legally transfer ownership of an Improvement to Itan due to local laws, they are still obligated to grant Itan a perpetual license to use that Improvement. This ensures that Itan retains control over the use and commercialization of any Improvements developed by its franchisees, even in situations where outright ownership transfer is not possible.

For a prospective Itan franchisee, this condition highlights the importance of understanding local laws regarding intellectual property and assignment rights. While the standard agreement requires assignment, the perpetual license provision acts as a safeguard for Itan, ensuring they can still benefit from franchisee-developed Improvements. Franchisees should be aware that they will not be able to independently commercialize or license any Improvements they develop, as those rights are either assigned to Itan or licensed perpetually to them.