Is there a requirement for other owners besides the Managing Owner to personally participate in the operation or management of the Itan Business?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
We do not require that any of your other owners personally participate in the operation or management of your Business. If you are an entity, each owner (i.e., each person holding a direct or indirect ownership interest in the entity) and the spouse of each owner must sign the Franchise Owner Agreement attached to the Franchise Agreement as ATTACHMENT "D". By signing the Franchise Owner Agreement, the owner (or spouse of the
owner) agrees to: (a) comply with all brand protection covenants, covenants that protect our intellectual property and transfer restrictions in the Franchise Agreement; and (b) guarantee the franchisee's financial obligations.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 35–36)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, Itan does not require owners other than the Managing Owner to participate in the operation or management of the business. However, if the franchisee is an entity, each owner (and their spouse) must sign a Franchise Owner Agreement. By signing this agreement, the owner agrees to comply with brand protection covenants, protect Itan's intellectual property, adhere to transfer restrictions in the Franchise Agreement, and guarantee the franchisee's financial obligations.
This means that while passive ownership is permitted, all owners must legally commit to protecting Itan's brand and financial interests. This is a fairly standard practice in franchising, as franchisors want to ensure that all individuals with a financial stake in the business are aligned with the franchisor's goals and are held accountable for upholding brand standards.
Prospective franchisees should carefully review the Franchise Owner Agreement to understand the full scope of their obligations. Even if an owner is not actively involved in the day-to-day operations, they will still be bound by the terms of this agreement and could be held liable for any breaches of the Franchise Agreement.