Is termination of a lease due to an Itan franchisee's default a curable default?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
| THE FRANCHISE RELATIONSHIP | ||
|---|---|---|
| PROVISION S | ||
| a. Length of | FA: 1 (definition of Term) | Term is equal to 10 years. |
| franchise term | & 4.1 | |
| ADA: 1 (definition of | Term expires on the opening date listed in the development schedule for | |
| Term) | the last Salon you are required to develop. | |
| b. Renewal or extension of the term | FA: 4.1 & 4.2 | If you meet our conditions for renewal, you can enter into 2 consecutive successor franchise agreements. Each renewal term will be 5 years. The parties may mutually agree to further renewals but neither party is obligated to do so (subject to state law). |
| ADA: Not Applicable | No renewal rights. Parties must enter into a new area development agreement in order to grant you additional development rights. | |
| c. Requirements for you to renew or extend | FA: 4.1 & 4.2 | You must: not be in default; give us timely notice; sign then-current form of franchise agreement; sign general release (subject to state law); pay renewal fee; remodel Salon and upgrade furniture, fixtures and equipment to current standards; and extend lease term. If you renew, you may be required to sign a contract with materially different terms and conditions than the original contract. |
| ADA: Not Applicable | No renewal rights. Parties must enter into a new area development agreement in order to grant you additional development rights. | |
| d. Termination by | FA: 20.1 | You can terminate if we default and fail to timely cure. |
| you | ||
| ADA: Not Applicable | You can terminate under any grounds permitted by law. | |
| e. Termination by | FA: 20.3 | We can terminate without cause if you and we mutually agree to |
| us without cause | terminate. | |
| ADA: Not Applicable | Not applicable | |
| THE FRANCHISE RELATIONSHIP | ||
| Provision | SECTIONS IN AGREEMENT | SUMMARY |
| f. Termination by | FA: 20.2 | W |
| us with cause | ADA: 9.1 | We can terminate if you default. |
| g. "Cause" defined - curable defaults | FA: 20.2 | You have the following cure periods: (a) 10 days for financial defaults; and (b) 30 days for any other default (other than a default described below under "non-curable defaults"). |
| - curable defaults | ADA: 9.1 | You have 30 days to cure any default, other than defaults described below under "non-curable defaults". |
| h. "Cause" defined - non-curable defaults | FA: 20.2 | The following defaults cannot be cured: insolvency, bankruptcy or seizure of assets; failure to successfully complete training; failure to find approved site, secure lease or open in timely manner; abandonment; failure to maintain required license or permit; conviction of certain crimes or subject of certain administrative actions; violation of material law; commission of act that may adversely affect reputation of System or Marks; health or safety hazards; material misrepresentations; 2 nd underreporting of amounts due by at least 3%; unauthorized Transfers; unauthorized use of our intellectual property; violation of brand protection covenant; breach of Franchise Owner Agreement; breach of legal compliance representations; failure to notify us of a matter described in §15.6; termination of lease due to your default; 3 or more default notices in a 12-month period; or termination of any other agreement between you (or your affiliate) and us (or our affiliate) due to your default. However, termination of an ADA due to breach of the development schedule is not grounds for termination of any Franchise Agreement that is otherwise in good standing. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 36–39)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, termination of a lease due to an Itan franchisee's default is considered a non-curable default. This means that if the lease for the franchisee's premises is terminated because of their default, the franchisee does not have an opportunity to correct the situation and prevent termination of the Franchise Agreement.
This has significant implications for a prospective Itan franchisee. Securing and maintaining a lease is critical for operating the business. If a franchisee fails to meet their lease obligations, leading to termination, Itan can terminate the Franchise Agreement without allowing the franchisee a chance to rectify the lease default. This could result in the franchisee losing their business and investment due to a lease-related issue.
In the franchise industry, cure periods are common for many types of defaults, giving franchisees a chance to correct issues like payment problems or operational deficiencies. However, the Itan franchise agreement specifically lists lease termination due to default as a non-curable event, placing a heightened importance on franchisees to diligently manage their lease obligations and maintain a strong relationship with their landlord.