Does the transferee of an Itan franchise pay a separate initial franchise fee?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
ies created by this Agreement are personal to you and the Owners. We are granting you franchise 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 own and operate a Salon and meets our minimum criteria for franchisees;
- (b) you and your affiliates and Owners 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 any applicable training fee (the transfer fee covers training for one (1) Person);
- (d) your landlord consents to the assignment of your lease to the transferee, or the transferee is diligently pursuing an approved substitute location within the Site Selection Area;
- (e) the transferee and its owners obtain all licenses and permits required by applicable Law to own and operate the Salon;
- (f) the transferee: (i) agrees to discharge and guarantee your obligations under this Agreement and any other Business contracts (including customer contracts/obligations and supplier contracts); and (ii) signs any agreement we require to confirm the foregoing;
- (g) the transferee and its owners sign our then-current form of franchise agreement (unless we instruct you to assign this Agreement to the transferee) except that: (i) the Term and renewal term(s) shall be the Term and renewal term(s) remaining under this Agreement unless we specify otherwise; and (ii) the transferee need not pay a separate initial franchise fee;
- (h) the transferee agrees to remodel the Salon and upgrade all furniture, fixtures and equipment to conform to our then-current standards and specifications (these changes m
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, a transferee might not have to pay a separate initial franchise fee. The FDD states that the transferee and its owners must sign the then-current form of the franchise agreement unless Itan instructs the transferor to assign the existing agreement to the transferee. If the transferee signs a new franchise agreement, they "need not pay a separate initial franchise fee."
However, there are several conditions that must be met for the transfer to be approved. The transferee must meet Itan's minimum criteria for franchisees, and both the transferor and their affiliates and owners must be in full compliance with all definitive agreements. The transferee's owners must also successfully complete the initial training program, and the transferee must pay any applicable training fee. The landlord must consent to the assignment of the lease, or the transferee must be diligently pursuing an approved substitute location.
Additionally, the transferee must obtain all necessary licenses and permits and agree to discharge and guarantee the transferor's obligations under the franchise agreement and other business contracts. The transferee must also agree to remodel the salon to conform to Itan's current standards within a specified timeframe. Finally, either the transferor or the transferee must pay a $10,000 transfer fee to cover Itan's expenses related to the transfer, and the transferor and their owners must sign a general release.
It is important for prospective transferees to carefully review all the conditions and requirements for transferring an Itan franchise to ensure they can meet them. They should also clarify with Itan whether a new franchise agreement is required and if the initial franchise fee will be waived, as the franchisor retains some discretion in this matter.