Can Itan prevent me from transferring my area development agreement?
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, your ability to transfer your area development agreement is restricted. Itan emphasizes that the agreement is personal to you and the owners, as they are granting you area development rights based on your character, skills, and financial resources.
Itan's consent is required for any transfer of the area development agreement, unless it is a 'Permitted Transfer.' A 'Permitted Transfer' includes transfers between existing owners or to a new Developer Entity owned and controlled entirely by the original owners. However, even these 'Permitted Transfers' require Itan to receive 10 days' prior notice.
Itan will not unreasonably withhold approval for a transfer if certain conditions are met. These conditions include the proposed transferee having sufficient business experience and financial resources, compliance with all agreements, completion of the initial training program, signing Itan's current area development agreement, payment of a $10,000 transfer fee, assignment of all Franchise Agreements to the transferee, signing a General Release, and satisfying any other reasonable conditions Itan requires. If these conditions are not met, Itan has the right to void the transfer, which would constitute a breach of the agreement.