If a ground for default or termination in the Itan Franchise Agreement does not constitute 'reasonable cause' under Virginia law, what happens?

According to Itan's 2025 Franchise Disclosure Document, the Virginia Retail Franchising Act stipulates that it is unlawful for a franchisor to cancel a franchise without reasonable cause. If any of the grounds for default or termination outlined in the Itan Franchise Agreement or any supplemental agreements do not meet the definition of "reasonable cause" under the Virginia Retail Franchising Act or Virginia law, then that specific provision may not be enforceable. This amendment is added to Item 17 of the Disclosure Document.

For a prospective Itan franchisee in Virginia, this means that Itan cannot enforce a termination clause if it's deemed unreasonable under Virginia law. This provides a layer of protection to the franchisee, ensuring that terminations are based on legitimate and justifiable reasons. The determination of what constitutes "reasonable cause" would be based on the Virginia Retail Franchising Act and the broader laws of Virginia, which may be interpreted by the courts if a dispute arises.

This provision aims to protect franchisees from potentially unfair or arbitrary terminations by Itan. It aligns with the broader purpose of the Virginia Retail Franchising Act, which seeks to balance the power dynamic between franchisors and franchisees. Franchisees should be aware of this protection and consult with legal counsel to understand their rights under Virginia law should a termination issue arise.