Must the proposed transferee in an Itan franchise transfer meet minimum criteria for franchisees?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
ies created by this Agreement are personal to you and the Owners. We are granting you franchise 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 own and operate a Salon and meets our minimum criteria for franchisees;
- (b) you and your affiliates and Owners 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 any applicable training fee (the transfer fee covers training for one (1) Person);
- (d) your landlord consents to the assignment of your lease to the transferee, or the transferee is diligently pursuing an approved substitute location within the Site Selection Area;
- (e) the transferee and its owners obtain all licenses and permits required by applicable Law to own and operate the Salon;
- (f) the transferee: (i) agrees to discharge and guarantee your obligations under this Agreement and any other Business contracts (including customer contracts/obligations and supplier contracts); and (ii) signs any agreement we require to confirm the foregoing;
- (g) the transferee and its owners sign our then-current form of franchise agreement (unless we instruct you to assign this Agreement to the transferee) except that: (i) the Term and renewal term(s) shall be the Term and renewal term(s) remaining under this Agreement unless we specify otherwise; and (ii) the transferee need not pay a separate initial franchise fee;
- (h) the transferee agrees to remodel the Salon and upgrade all furniture, fixtures and equipment to conform to our then-current standards and specifications (these changes m
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, any transfer of an Itan franchise requires approval from Itan, and such approval will not be unreasonably withheld if certain conditions are met. One of these conditions is that Itan believes the proposed transferee has sufficient business experience, aptitude, and financial resources to own and operate a salon, and that they meet Itan's minimum criteria for franchisees. This indicates that Itan evaluates potential transferees against similar standards as new franchisees.
In addition to meeting the minimum criteria, the transferee must also fulfill other obligations. They need to successfully complete the initial training program (or make arrangements to attend it) and pay any applicable training fees. The transferee must also obtain all necessary licenses and permits required by law to operate the salon. Furthermore, the transferee is required to agree to discharge and guarantee the transferor's obligations under the franchise agreement and other business contracts, and they must sign any agreement Itan requires to confirm this.
The transferee and its owners are also required to sign Itan's then-current form of franchise agreement, although the term and renewal terms will remain the same as under the original agreement, and the transferee does not have to pay a separate initial franchise fee. The transferee must also agree to remodel the salon to meet Itan's current standards within 12 months of the transfer. Finally, either the transferor or the transferee must pay Itan a $10,000 transfer fee to cover expenses related to the transfer, and the transferor must sign a general release.
These requirements ensure that any new franchisee coming into the Itan system through a transfer meets Itan's standards and is fully prepared to operate the franchise successfully. It also protects Itan's interests by ensuring compliance with the franchise agreement and maintaining the brand's standards.