Under what circumstances is an Itan Owner presumed to have violated the terms of section 14?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
Because (a) an Owner could circumvent the intent of §14 by disclosing Confidential Information to an immediate family member (i.e., spouse, parent, sibling, child or grandchild) and (b) it would be difficult for us to prove whether the Owner disclosed Confidential Information to the family member, each Owner agrees that he or she will be presumed to have violated the terms of §14 if any member of his or her immediate family engages in any Prohibited Activity during the Term or Post-Term Restricted Period or uses or discloses Confidential Information.
However, the Owner may rebut this presumption with evidence conclusively showing he or she did not disclose Confidential Information to the family member.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, an Itan Owner is presumed to have violated the terms of section 14, which pertains to brand protection covenants, under specific circumstances related to the actions of their immediate family members. Specifically, if any member of the Owner's immediate family (spouse, parent, sibling, child, or grandchild) engages in any prohibited activity during the term or post-term restricted period, or uses or discloses confidential information, the Owner will be presumed to have violated section 14.
This presumption is in place because Itan recognizes the potential for Owners to circumvent the restrictions of section 14 by disclosing confidential information to family members, and the difficulty in proving such disclosures. However, the Owner has the opportunity to rebut this presumption by providing evidence that conclusively shows they did not disclose confidential information to the family member in question.
This clause places a significant responsibility on Itan Owners to ensure that their immediate family members also respect the confidentiality and non-compete obligations outlined in the franchise agreement. It also highlights the importance of understanding what constitutes "prohibited activity" and "confidential information" as defined in the agreement, as the actions of family members could have direct legal and financial repercussions for the Owner. Prospective franchisees should carefully review these definitions and consider the potential implications for their families before entering into a franchise agreement with Itan.