Under the Itan area development agreement, does the definition of 'Term' depend on the Development Schedule?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
- "Required Salon" means each Salon referenced in the Development Schedule that you are required to develop and open pursuant to this Agreement during the Term.
The term "Required Salon" does not include any Optional Salon.
- "Term" means the period of time beginning on the Effective Date of this Agreement and expiring on the earlier to occur of: (a) the opening date listed in the Development Schedule for the last Required Salon you are required to open; or (b) the date this Agreement is effectively terminated.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the 'Term' of the Area Development Agreement is directly tied to the Development Schedule. The term begins on the effective date of the agreement and ends on the earlier of two conditions: either the opening date listed in the Development Schedule for the last Required Salon, or the date the agreement is effectively terminated. This means the duration of the agreement is dependent on the franchisee's adherence to the Development Schedule.
For a prospective Itan area developer, this definition of 'Term' has significant implications. The developer is obligated to open salons according to the Development Schedule, and failure to do so could lead to a breach of the agreement. However, if the developer opens all Required Salons ahead of schedule, the term ends on the listed opening date for the last salon, not necessarily when it actually opens.
It is important to note that the definition of 'Term' also affects the option to open Optional Salons. The Itan FDD states that if a developer opens all Required Salons and substantially complies with the Development Schedule, they have the option to open additional salons within the Development Territory during the remaining Term. Therefore, any delays in meeting the Development Schedule will reduce the time available to open these Optional Salons, potentially impacting the overall profitability of the development agreement.