Does Itan reserve the right to sell competitive goods and services through Alternative Channels of Distribution within my territory?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
n your territory and development territory, if applicable.
Alternative Channels of Distribution
We reserve the right to sell, and license others to sell, competitive or identical goods and services (either under the Marks or different trademarks) through Alternative Channels of Distribution, including within your territory and development territory, if applicable. An "Alternative Channel of Distribution" means any channel of distribution other than retail sales made to customers while present at a Salon. Examples of Alternative Channels of Distribution include:
- sales through direct marketing, such as over the Internet or through catalogs or telemarketing
- sales through retail stores that do not operate under the Marks, such as grocery stores, convenience stores, spas and tanning salons (other than spas or tanning salons operating under the Marks)
sales made at wholesale
You are not entitled to any compensation for sales that take place through Alternative Channels of Distribution.
Restrictions on Your Sales and Marketing Activities
You can market and advertise outside of your territory and development territory, if applicable, as long as: (a) you comply with all policies and procedures in the Manual governing extra-territorial marketing; and (b) you do not engage in targeted marketing directed into any territory or development territory assigned to us, our affiliate or another franchisee (unless the marketing is conducted as part of an advertising cooperative that includes the affected territory).
Source: Item 12 — TERRITORY (FDD pages 31–33)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, Itan retains the right to sell, and license others to sell, competitive or identical goods and services through Alternative Channels of Distribution, even within a franchisee's territory. These sales can occur under Itan's trademarks or different trademarks. Alternative Channels of Distribution are defined as any sales channel other than retail sales to customers physically present at an Itan Salon. Examples include direct marketing (internet, catalogs, telemarketing), sales through retail stores not branded as Itan (grocery stores, convenience stores, spas, and tanning salons), and wholesale sales.
This reservation of rights has significant implications for prospective Itan franchisees. It means that Itan can compete directly with its franchisees within their own territories through various channels. For example, Itan could sell Itan-branded products online or through other retail outlets in the same area where a franchisee operates a physical salon. This could potentially reduce the franchisee's sales and profitability.
The FDD explicitly states that franchisees are not entitled to any compensation for sales made through these Alternative Channels of Distribution. This lack of compensation further underscores the risk to franchisees, as they bear the full impact of any competition from Itan's alternative channels without any offsetting benefit.
Furthermore, the document states that franchisees themselves are restricted from marketing or selling through Alternative Channels of Distribution, such as the internet or catalog sales, both within and outside their territory. This creates a one-sided arrangement where Itan can utilize these channels to compete, but franchisees cannot. Prospective franchisees should carefully consider the potential impact of these competitive sales channels on their investment and discuss this issue thoroughly with Itan before signing a Franchise Agreement.