During the term or Post-Term Restricted Period, what activities are considered 'Prohibited Activities' for Itan franchisees and owners?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
- "Prohibited Activities" means and includes any of the following: (a) owning, operating or having any other interest (e.g., as a director, officer, employee, manager, consultant, creditor, representative, agent or in any similar capacity) in a Competing Business, other than owning less than 5% of the Equity Interests in a Competing Business that is a publicly-traded company; (b) disparaging or otherwise making negative comments about us, our affiliate, the System or a Salon (this provision does not prohibit disclosure of truthful information to Governmental Authorities); (c) diverting business from us, our affiliate or another franchisee; or (d) inducing a Person to transfer their business from a Salon to a competitor.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, 'Prohibited Activities' are specifically defined for franchisees and owners during both the term of the agreement and the post-term restricted period. These activities include owning, operating, or having any interest in a Competing Business, with a minor exception for owning less than 5% of the equity interests in a publicly-traded Competing Business.
Additionally, franchisees and owners are prohibited from disparaging Itan, its affiliates, the System, or any Salon. This restriction aims to protect the brand's reputation, but it does allow for truthful information to be disclosed to Governmental Authorities. It is also forbidden to divert business away from Itan, its affiliates, or other franchisees, ensuring that franchisees do not undermine the network for personal gain.
Finally, franchisees and owners cannot induce any person to transfer their business from an Itan Salon to a competitor. This prevents franchisees from actively poaching customers or business opportunities from the Itan system to benefit a competing entity. These restrictions are designed to protect Itan's market position and the interests of its franchisees by preventing unfair competition and brand damage.