Is there a transfer fee associated with the Franchise Agreements when transferring my Itan area development agreement?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
h such Entity guarantees the performance of all other Entities formed under the authority of this §7. Each Owner, and the spouse of each Owner who is a natural Person, must sign a Franchise Owner Agreement.
8. TRANSFERS
8.1. By Us. This Agreement is fully assignable by us, without prior notice to you, and shall inure to the
benefit of any assignee(s) or other legal successor(s) to our interest in this Agreement, provided that we shall, subsequent to any such assignment, remain liable for the performance of our obligations under this Agreement up to the effective date of the assignment.
- 8.2. By You. The rights and duties created by this Agreement are personal to you and the Owners. We are granting you area development rights in reliance upon the character, skill, attitude, business ability and financial resources of you and your Owners. Because this Agreement is a personal services contract, neither you nor any Owner may engage in a Transfer (other than a Permitted Transfer) without our prior approval. Any Transfer (other than a Permitted Transfer) without our approval is void and constitutes a breach of this Agreement. We will not unreasonably withhold our approval of a proposed Transfer if all of the following conditions are satisfied:
- (a) we believe the proposed transferee has sufficient business experience, aptitude and financial resources to develop, own and operate all Required Salons remaining to be developed under this Agreement and meets our minimum criteria for area developers;
- (b) you and your Owners and affiliates are in full compliance with all Definitive Agreements;
- (c) the transferee's owners successfully complete, or make arrangements to attend, the initial training program and the transferee pays us any applicable training fee;
- (d) the transferee and its owners sign our then-current form of area development agreement (unless we, in our sole discretion, instruct you to assign this Agreement to the transferee), except that: (i) the Term shall be the Term remaining under this Agreement; (ii) the transferee need not pay a separate Development Fee; and (iii) the Development Schedule and Development Territory shall be the same Development Schedule and Development Territory specified in this Agreement (modified to reflect the development obligations satisfied prior to the Transfer);
- (e) you or the transferee pay us a $10,000 transfer fee (in addition to the transfer fee, you must reimburse us for any commission we pay our br
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, if you transfer your Area Development Agreement, you must assign all Franchise Agreements to the transferee. This includes paying any transfer fee imposed under each Franchise Agreement, unless Itan waives this requirement. In addition to the franchise agreement transfer fee, you or the transferee must pay Itan a $10,000 transfer fee. You must also reimburse Itan for any commission they pay their broker if their broker finds the transferee.
It is typical in franchising for franchisors to charge transfer fees to cover their administrative costs and ensure that the new franchisee is adequately trained and qualified. The transfer is not approved until the transferee's owners successfully complete, or make arrangements to attend, the initial training program and the transferee pays any applicable training fee.
Itan will not unreasonably withhold approval of a proposed transfer if certain conditions are met. These conditions include the transferee having sufficient business experience, aptitude, and financial resources to develop, own, and operate the remaining required salons. Additionally, you and your owners and affiliates must be in full compliance with all definitive agreements. You and your Owners must also sign a General Release.
Itan also retains the right of first refusal, meaning they can choose to take over the area development agreement themselves instead of approving a transfer to a third party. The conditions listed are not exhaustive, as Itan may reasonably require other conditions to be satisfied for approval of the transfer.