If there is an inconsistency, which document prevails between the Itan FDD and the State Addendum?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
MENTAL AGREEMENTS AND FRANCHISE DISCLOSURE DOCUMENT FOR CERTAIN STATES**
BACKGROUND AND PURPOSE
The following modifications are made to the iTAN Franchise Disclosure Document ("FDD" or "Disclosure Document") issued by iTAN Franchising, Inc. ("we" or "us" or "franchisor") to franchisee ("you" or "franchisee") and may supersede certain portions of the Franchise Agreement between you and us dated _________________________, 202__ (the "Franchise Agreement"). When the term "Supplemental Agreements" is used, it means any area development agreement, area representative agreement, master franchise agreement, or similar agreement entered into between us and you, if applicable.
Certain states have laws governing the franchise relationship and franchise documents. Certain states require modifications to the FDD, Franchise Agreement, Supplemental Agreements and other documents related to the sale of a franchise. This State-Specific Addendum ("State Addendum") will modify these agreements to comply with the applicable state's laws. The terms of this State Addendum will only apply if you meet the requirements of the applicable state independently of your signing of this State Addendum. The terms of this State Addendum (but only the State Addendum for the applicable State) will override any inconsistent provision of the FDD, Franchise Agreement or any Supplemental Documents. This State Addendum only applies to the following states: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin.
If your state requires these modifications, you will sign this State Addendum along with the Franchise Agreement and any Supplemental Agreements. If you sign this State Addendum, only the terms applicable to the state or states whose franchise laws apply to your transaction will govern. If you sign this State Addendum, but none of the state franchise laws listed above applies because their jurisdictional requirements have not been met, then this State Addendum will be void and inapplicable to you.
CALIFORNIA
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- The California Franchise Investment Law requires a copy of all proposed agreements relating to the sale of the Franchise be delivered together with the Disclosure Document.
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- Section 31125 of the California Corporations Code requires us to give you a disclosure document, in a form containing the information that the Commissioner may by rule or order require, before a solicitation of a proposed material modification of an existing franchise.
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- Neither the franchisor nor any person or franchise broker in Item 2 of the FDD is subject to any currently effective order of any national securities association or national securities exchange, as defined in the Securities Exchange Act of 1934, 15 U.S.C.A. 78a et seq., suspending or expelling such persons from membership in such association or exchange.
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Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the State Addendum takes precedence over any inconsistent terms in the FDD, Franchise Agreement, or Supplemental Documents. This applies only to franchisees in California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin, provided they meet the jurisdictional requirements of those states. If a franchisee signs the State Addendum but does not meet the state's jurisdictional requirements, the State Addendum is considered void and inapplicable.
For franchisees in Illinois, the Illinois State Addendum specifically controls over any inconsistent provision in the Franchise Agreement. This ensures that the franchise operations comply with the Illinois Franchise Disclosure Act. The FDD also highlights that Illinois law governs the Franchise Agreement and Supplemental Agreements, and any clause designating jurisdiction and venue outside Illinois is void, although arbitration outside the state is permitted.
This means that prospective Itan franchisees should carefully review the State Addendum applicable to their state, if any, and understand that its terms will supersede any conflicting terms in the standard franchise documents. This is a fairly common practice in franchising, as franchisors often need to make state-specific modifications to comply with local laws and regulations. Franchisees should consult with legal counsel to ensure they fully understand the implications of the State Addendum and how it affects their rights and obligations.