Does the transferee of an Itan franchise have to sign the then-current form of franchise agreement?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
greement 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 are transferring your area development agreement, the transferee and its owners must sign Itan's then-current form of area development agreement. However, there are a few exceptions to this rule. The term will be the term remaining under the original agreement, the transferee does not need to pay a separate development fee, and the development schedule and territory will remain the same as the original agreement, adjusted for any obligations already fulfilled.
In general, for any transfer of an Itan franchise, the franchisor will not unreasonably withhold approval if certain conditions are met. These conditions include the franchisor believing the proposed transferee has sufficient business experience, aptitude, and financial resources to own and operate a salon, and that the transferee's owners successfully complete the initial training program. Additionally, the franchisee and its owners must be in full compliance with all definitive agreements.
Furthermore, the franchisee or transferee must pay a $10,000 transfer fee, and the franchisee must assign all franchise agreements to the transferee, including payment of any transfer fee imposed under each franchise agreement, unless Itan waives this requirement. Both the franchisee and owners must sign a general release, and Itan must not exercise its right of first refusal. Finally, both the franchisee and the transferee must satisfy any other conditions Itan reasonably requires for approval of the transfer.