If an Itan franchisee fails to open in a timely manner, is this a curable default?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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.
- 9.2. By Mutual Agreement. If you and we mutually agree in writing to terminate this Agreement, any notice or cure period that might otherwise apply shall be deemed waived.
- 10. EFFECT OF TERMINATION. Termination of this Agreement ends all your rights and development obligations under this Agreement, including your interests in the Development Territory and right to sign new Franchise Agreements or open new Salons. We will not refund any portion of the development fee.
- 11. DISPUTE RESOLUTION. Any Dispute between the parties relating to this Agreement shall be resolved pursuant to the dispute resolution provisions in the Initial Franchise Agreement. All such dispute resolution provisions are incorporated herein by reference as if fully set forth in this Agreement.
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, failure to open in a timely manner is a curable default. Specifically, if an Itan franchisee breaches any provision of the Franchise Agreement, they have 30 days after receiving a default notice to cure the breach. If the franchisee fails to cure the breach within this 30-day period, Itan has the right to terminate the agreement.
This means that if an Itan franchisee fails to meet the opening deadline outlined in their agreement, they will receive a default notice from Itan. The franchisee then has 30 days to rectify the situation, which could involve accelerating the opening process, resolving any outstanding issues, or negotiating an extension with Itan.
However, Itan can terminate the agreement, effective immediately upon delivery of a notice of termination, if the franchisee defaults on any Definitive Agreement. It is important to note that even if a franchisee cures a default, if Itan sends three or more default notices within a 12-month period, Itan can terminate the agreement. Therefore, consistent compliance is essential to maintaining the franchise agreement.