Does Itan have a right of first refusal to purchase the franchise?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
rade name, logotype, advertising, or other commercial symbol in the same area subsequent to the expiration of the franchise or the franchisee does not receive at least 6 months advance notice of franchisor's intent not to renew the franchise.
- (e) A provision that permits the franchisor to refuse to renew a franchise on terms generally available to other franchisees of the same class or type under similar circumstances. This section does not require a renewal provision.
- (f) A provision requiring that arbitration or litigation be conducted outside this state. This shall not preclude the franchisee from entering into an agreement, at the time of arbitration, to conduct arbitration at a location outside this state.
- (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:
- (v) The failure of the proposed transferee to meet the franchisor's then current reasonable qualifications or standards.
- (vi) The fact that the proposed transferee is a competitor of the franchisor or subfranchisor.
- (vii) The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.
- (viii) The failure of the franchisee or proposed transferee to pay any sums owing to the franchisor or to cure any default in the franchise agreement existing at the time of the proposed transfer.
- (h) A provision that requires the franchisee to resell to the franchisor items that are not uniquely identified with the franchisor.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, Itan has a right of first refusal regarding the transfer of a franchise. Specifically, if a franchisee or owner wishes to transfer the franchise, they must first obtain a bona-fide offer from a prospective purchaser after the purchaser completes their due diligence. This offer must then be sent to Itan.
This right of first refusal allows Itan to step in and purchase the franchise on the same terms as the offer received from the third party. This is a common practice in franchising, allowing the franchisor to maintain control over the brand and the quality of franchisees within the system. It also ensures that Itan can prevent the franchise from falling into the hands of someone who may not be a good fit for the brand, such as a competitor.
Additionally, the FDD states that a provision permitting Itan to refuse a transfer of ownership is acceptable, provided it is for good cause. Good cause includes the proposed transferee's failure to meet Itan's qualifications, being a competitor of Itan, unwillingness to comply with obligations, or failure to pay sums owed to Itan. Itan also has the right to purchase the assets of a franchise if the franchisee has breached the franchise agreement and failed to cure the breach.