What is the 'Restricted Territory' as it relates to an Itan franchisee's ability to have interest in a competing business?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
nother franchisee; or (d) inducing a Person to transfer their business from a Salon to a competitor.
- "Reportable Event" means any event or occurrence described in §15.6 that you must report to us.
- "Restricted Territory" means the geographic area within a 10-mile radius from: (a) your Salon (including the Salon's premises); and (b) all other Salons that are operating or under construction when the Post-Term Restricted Period begins; provided, however, that if a court of competent jurisdiction determines the foregoing Restricted Territory is too broad to be enforceable then Restricted Territory means the
geographic area within a 10-mile radius from your Salon (including the Salon's premises).
- "Salon" means any salon we authorize to operate under the Marks and use our System.
- "Site Approval Notice" means the Site Approval Notice attached as ATTACHMENT "B" that we may issue to you pursuant to §3 and §7.1 to identify the approved site for your Salon and your Territory.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the 'Restricted Territory' defines the geographic area where certain competitive restrictions apply to a franchisee. Specifically, it affects the franchisee's ability to have an interest in a competing business during both the term of the franchise agreement and for a period after the agreement ends.
The Restricted Territory is defined as the area within a 10-mile radius of the franchisee's Itan salon, including the salon's premises. It also includes the area within a 10-mile radius of all other Itan salons that are operating or under construction when the post-term restricted period begins. This means that the franchisee's non-compete obligations extend not only around their own location but also around other existing or planned Itan locations.
However, the definition also includes a clause that acknowledges the possibility of judicial review. If a court determines that the 10-mile radius is too broad to be enforceable, the Restricted Territory will then be limited to the area within a 10-mile radius solely from the franchisee's Itan salon. This acknowledges that the enforceability of non-compete agreements can vary by jurisdiction and that a more limited scope may be necessary to ensure enforceability. The franchisee is allowed to have interest in a competing business as long as that business is not located in the restricted territory.