Under what condition can an Itan franchisee or owner have an interest in a Competing Business during the Post-Term Restricted Period?

According to Itan's 2025 Franchise Disclosure Document, an Itan franchisee or owner may have an interest in a Competing Business during the Restricted Period if the Competing Business is not located within the Restricted Territory. The Restricted Period is generally two years after the termination or expiration of the Franchise Agreement or when the franchisee or their spouse no longer holds an equity interest in the business. However, this period may be reduced to one year if a court deems the two-year period unenforceable. The Post-Term Restricted Period applies to both the franchisee and any owners of the franchise entity.

The Restricted Territory is defined as the geographic area within a 10-mile radius of the Itan Salon and any other Itan Salons operating or under construction when the Post-Term Restricted Period begins. This radius may be reduced if a court finds the 10-mile restriction too broad.

In practical terms, this means that a former Itan franchisee or owner can invest in or operate a competing business as long as it's located outside the defined 10-mile radius (or the reduced radius determined by a court) of any Itan salon. However, if the competing business is within the Restricted Territory, it would be considered a Prohibited Activity, potentially leading to an extension of the Post-Term Restricted Period. It is important for prospective franchisees to understand these restrictions and how they might impact their future business opportunities after leaving the Itan franchise system.