If I transfer my Itan area development agreement, what happens to the remaining term?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
h such Entity guarantees the performance of all other Entities formed under the authority of this §7. Each Owner, and the spouse of each Owner who is a natural Person, must sign a Franchise Owner Agreement.
8. TRANSFERS
8.1. By Us. This Agreement is fully assignable by us, without prior notice to you, and shall inure to the
benefit of any assignee(s) or other legal successor(s) to our interest in this Agreement, provided that we shall, subsequent to any such assignment, remain liable for the performance of our obligations under this Agreement up to the effective date of the assignment.
- 8.2. By You. The rights and duties created by this Agreement are personal to you and the Owners. We are granting you area development rights in reliance upon the character, skill, attitude, business ability and financial resources of you and your Owners. Because this Agreement is a personal services contract, neither you nor any Owner may engage in a Transfer (other than a Permitted Transfer) without our prior approval. Any Transfer (other than a Permitted Transfer) without our approval is void and constitutes a breach of this Agreement. We will not unreasonably withhold our approval of a proposed Transfer if all of the following conditions are satisfied:
- (a) we believe the proposed transferee has sufficient business experience, aptitude and financial resources to develop, own and operate all Required Salons remaining to be developed under this Agreement and meets our minimum criteria for area developers;
- (b) you and your Owners and affiliates are in full compliance with all Definitive Agreements;
- (c) the transferee's owners successfully complete, or make arrangements to attend, the initial training program and the transferee pays us any applicable training fee;
- (d) the transferee and its owners sign our then-current form of area development agreement (unless we, in our sole discretion, instruct you to assign this Agreement to the transferee), except that: (i) the Term shall be the Term remaining under this Agreement; (ii) the transferee need not pay a separate Development Fee; and (iii) the Development Schedule and Development Territory shall be the same Development Schedule and Development Territory specified in this Agreement (modified to reflect the development obligations satisfied prior to the Transfer);
- (e) you or the transferee pay us a $10,000 transfer fee (in addition to the transfer fee, you must reimburse us for any commission we pay our br
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, if you transfer your area development agreement, the transferee signs Itan's current form of area development agreement, unless Itan instructs you to assign the existing agreement. If a new agreement is signed, the term will be the time remaining under the original agreement. The transferee does not have to pay a separate development fee, and the development schedule and territory will remain the same as in the original agreement, adjusted to reflect any development obligations already fulfilled.
To transfer the area development agreement, you must meet several conditions. Itan must believe the transferee has sufficient business experience, aptitude, and financial resources to develop, own, and operate the remaining required salons and meets Itan's minimum criteria for area developers. You and your owners and affiliates must be in full compliance with all definitive agreements. The transferee's owners must successfully complete the initial training program or make arrangements to attend, and the transferee must pay any applicable training fee.
Additionally, you or the transferee must pay Itan a $10,000 transfer fee, and you must reimburse Itan for any commission paid to their broker if the broker found the transferee. You must also assign all franchise agreements to the transferee according to the transfer provisions in each franchise agreement, including paying any transfer fee, unless Itan waives this requirement. Finally, you and your owners must sign a General Release, and Itan must not exercise its right of first refusal. You or the transferring owner, as applicable, and the transferee must satisfy all other conditions Itan reasonably requires for approval of the transfer.