If Itan assumes liabilities on my behalf, how does that affect the purchase price?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
We may deduct from the purchase price: (i) any amounts you owe us or our affiliates under any Definitive Agreements including, if applicable, liquidated damages and other damages owed (other than lost profits) as a result of our termination of this Agreement due to your breach; and (ii) the amount of any liabilities we assume on your behalf, including future rent and pre-paid liabilities (e.g., gift cards or "package" purchases).
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, if Itan assumes any liabilities on your behalf when exercising its purchase option, the amount of those liabilities will be deducted from the purchase price they pay you for the Acquired Assets. This includes liabilities such as future rent and pre-paid liabilities like gift cards or "package" purchases.
This means that when Itan calculates the final purchase price for your franchise's assets, they will subtract any debts or obligations they are taking over from the amount they would otherwise pay you. This could significantly reduce the amount you receive at closing, depending on the extent of the liabilities assumed by Itan.
For a prospective Itan franchisee, it's crucial to understand what constitutes a liability in this context and to carefully manage your salon's financial obligations. Minimizing liabilities, such as outstanding rent or large amounts of unredeemed gift cards, can help ensure a higher payout if Itan decides to exercise its purchase option. It is also important to fully understand the terms of the Asset Purchase Agreement to know what liabilities Itan might assume.