If Itan exercises its purchase option, can Itan require me to assign my lease to them at no additional charge?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
If we choose to exercise our purchase option, we will notify you of the assets we wish to purchase (the "Acquired Assets") within 20 days after the termination or expiration date.
If we exercise our purchase option we may require that: (i) you assign your lease to us at no additional charge (if you lease the premises); or (ii) you or your affiliate enter into a lease with us upon standard and commercially reasonable leasing terms, including rent at fair rental value, for a term of 10 years or such shorter term that we specify (if you or your affiliate own the real estate).
The purchase price for the Acquired Assets will be: (i) the purchase price established by the parties (if mutually agreed upon); or (ii) the Appraised Value established in accordance with §21.2(b) below.
We may, at our option, assign our purchase option to a designee of our choosing.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, if Itan chooses to exercise its purchase option upon the termination or expiration of your franchise agreement, they may require you to assign your lease to them at no additional charge, provided you lease the premises. Alternatively, if you or your affiliate owns the real estate, Itan may require you or your affiliate to enter into a lease with them under standard and commercially reasonable terms, including rent at fair rental value, for a term of 10 years or a shorter term as specified by Itan.
It is important to note that Itan must notify you of the assets they wish to purchase within 20 days after the termination or expiration date. The purchase price for these assets will be either mutually agreed upon by both parties or determined by an appraisal process to establish the fair market value, excluding any value for goodwill or franchise rights.
This clause gives Itan significant control over the location of the franchise after the agreement ends. As a prospective franchisee, you should carefully consider the implications of potentially losing your lease or being required to lease the property to Itan, and negotiate favorable terms where possible. You should also seek clarification on what constitutes 'standard and commercially reasonable leasing terms' and 'fair rental value' to avoid potential disputes in the future.