Under what circumstances does Itan require the franchisee to notify them of a desire to transfer the Franchise Agreement?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
- B. You have notified us of your desire to transfer the Franchise Agreement and all rights related thereto, or an ownership interest in the franchisee entity, to a transferee, [enter into a successor franchise agreement] and we have consented to such transfer [agreed to enter into a successor franchise agreement].
- **19.3.
Permitted Transfers.** You may engage in a Permitted Transfer without our prior approval, but you must: (a) give us at least 10 days' prior notice; and (b) upon our request, cause the former Franchisee Entity to sign a corporate guarantee in the format we require to secure performance of the new Franchisee Entity's financial obligations under all Definitive Agreements (if the Permitted Transfer results in a new Franchisee Entity).
You and the Owners (and transferee) must sign all documents we reasonably request to effectuate and document the Permitted Transfer.
- **19.5.
Our Right of First Refusal.** If you or an Owner wish to engage in a Transfer, you or the Owner, as applicable, must obtain and send us a bona-fide offer executed by the purchaser after completion of due diligence.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, a franchisee must notify Itan when they desire to transfer the Franchise Agreement and all related rights, or an ownership interest in the franchisee entity, to a transferee. This notification is required when the franchisee wishes to enter into a successor franchise agreement, and Itan's consent is needed for such a transfer or agreement.
Specifically, if a franchisee or owner wishes to engage in a transfer, they must obtain a bona-fide offer executed by the purchaser after due diligence and send it to Itan. However, for a 'Permitted Transfer,' the franchisee only needs to give Itan at least 10 days' prior notice. After the permitted transfer, upon Itan's request, the former Franchisee Entity must sign a corporate guarantee to secure the new Franchisee Entity's financial obligations.
Itan retains certain rights and conditions regarding transfers, including the right of first refusal. Itan may also reasonably require additional conditions for approving the transfer. The consent to a transfer does not waive any claims Itan has against the transferor, and Itan can still demand that the transferee comply with all terms of the franchise agreement. These provisions ensure Itan maintains control over who operates under their brand and that financial obligations are secured during and after the transfer process.