Can Itan refuse a transfer if the proposed transferee is a competitor of the franchisor?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
- (g) A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise, except for good cause.
This subdivision does not prevent a franchisor from exercising a right of first refusal to purchase the franchise.
Good cause shall include, but is not limited to:
- (vi) The fact that the proposed transferee is a competitor of the franchisor or subfranchisor.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, Itan can refuse a franchise transfer if the proposed transferee is a competitor. The FDD states that a franchisor can refuse a transfer of ownership for "good cause."
Good cause includes several factors, one of which is if "the proposed transferee is a competitor of the franchisor or subfranchisor." This means Itan has the right to deny a transfer to someone who operates a competing business.
This provision protects Itan from having its proprietary information, business practices, and brand knowledge fall into the hands of a competitor. For a potential franchisee, this highlights the importance of finding a suitable and non-competing buyer if they decide to sell their Itan franchise.