What is the term length that Itan may specify if they require me or my affiliate to enter into a lease with them?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
If we exercise our purchase option we may require that: (i) you assign your lease to us at no additional charge (if you lease the premises); or (ii) you or your affiliate enter into a lease with us upon standard and commercially reasonable leasing terms, including rent at fair rental value, for a term of 10 years or such shorter term that we specify (if you or your affiliate own the real estate).
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, if Itan exercises its purchase option upon the termination or expiration of the franchise agreement, they may require the franchisee or their affiliate to enter into a lease with them. The term length for this lease can be 10 years, or Itan may specify a shorter term, provided the leasing terms are standard and commercially reasonable, including rent at fair rental value.
This clause is triggered if Itan decides to buy back the assets of the franchise after the agreement ends. Instead of the franchisee continuing to operate at the location, Itan has the option to take over the lease or have the franchisee (or an affiliate who owns the property) lease the location to them. This gives Itan flexibility in maintaining the location within their system, even after a franchisee exits.
For a prospective franchisee, this means there's a possibility of being required to lease the property to Itan under specific conditions at the end of the franchise term. It's important to understand what constitutes "standard and commercially reasonable leasing terms" and "fair rental value" to avoid potential disputes. Franchisees should seek legal counsel to review the lease terms if this situation arises to ensure they are indeed fair and reasonable.