If an Itan franchisee or owner is convicted of a felony, can Itan terminate the 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 can terminate the franchise agreement, effective immediately upon delivering a termination notice, if any of the 'Definitive Agreements' are terminated due to a default by the franchisee, one of the franchisee's owners, or their affiliates. Additionally, Itan can terminate the agreement if the franchisee or an owner breaches any provision of the agreement and fails to correct the breach within 30 days after receiving a default notice.
While the excerpt does not explicitly state that a felony conviction is grounds for termination, it does state that Itan can terminate the agreement if the franchisee or an owner breaches any provision of the agreement and fails to cure within 30 days after receipt of a default notice. The term 'Definitive Agreements' is not defined within this excerpt.
It is important for a prospective franchisee to understand what constitutes a 'Definitive Agreement' and what specific actions or events would be considered a breach of the franchise agreement. A prospective franchisee should consult with a legal professional to fully understand the circumstances under which Itan can terminate the franchise agreement, including whether a felony conviction would be considered a breach or default that leads to termination.