Under what conditions can an Itan franchisee enter into successor franchise agreements?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
We reserve the right to sell, and license third parties to sell, competitive or identical goods and services (including under the Marks) within the Territory through Alternative Channels of Distribution.
4. TERM AND RENEWAL.
- 4.1. Generally. This Agreement grants you the right to operate your Salon during the Term. You may renew your franchise rights by signing a Successor Agreement for a five (5) year renewal term. You may enter into a maximum of two (2) Successor Agreements. The parties may agree to further renewals after expiration of the second (2nd) renewal term, but neither party is obligated to do so (unless required by applicable Law, in which case the same renewal terms and conditions set forth in this Agreement shall apply to subsequent renewals). In order to sign a Successor Agreement you must satisfy all renewal conditions specified in this Agreement or the Successor Agreement you wish to renew, as applicable. The Successor Agreement shall be the current form of franchise agreement we use to grant franchises as of the expiration of the Term or renewal term, as applicable, the terms of which may vary materially and substantially from the terms of this Agreement. Upon renewal, we reserve the right to modify the boundaries of your Territory in accordance with our then-current territory guidelines and criteria. If this Agreement is a Successor Agreement, the Term of this Agreement and your remaining renewal rights, if any, shall be governed by your original franchise agreement
- 4.2. Renewal Requirements. In order to renew, you and the Owners (as applicable) must:
- (a) send us a notice of your intent to enter into a Successor Agreement not less than 240 days nor more than one (1) year before the expiration of the Term or renewal term, as applicable;
- (b) not be in default under any Definitive Agreement at the time you send the renewal notice or sign the Successor Agreement;
- (c) sign the Successor Agreement and all ancillary documents we require franchisees to sign;
- (d) sign a General Release;
- (e) pay us a $1,000 renewal fee;
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 36–39)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, a franchisee can renew their franchise rights by signing a Successor Agreement for a five-year renewal term. A franchisee can enter into a maximum of two Successor Agreements, but the parties may agree to further renewals after the second renewal term, although neither party is obligated to do so unless required by applicable law. If the initial agreement is a Successor Agreement, the term and any remaining renewal rights are governed by the original franchise agreement.
To qualify for a Successor Agreement, the franchisee must meet specific renewal conditions. They must send Itan a notice of their intent to enter into a Successor Agreement between 240 days and one year before the expiration of the current term. The franchisee must not be in default under any agreement with Itan at the time of the renewal notice or when signing the Successor Agreement.
Additionally, the franchisee is required to sign the current form of the Successor Agreement and any related documents that Itan requires. A general release must also be signed. A renewal fee of $1,000 is required. The franchisee must remodel the salon and upgrade all furniture, fixtures, and equipment to meet Itan's current standards. Finally, the franchisee needs to extend the term of their lease to cover the duration of the renewal term.
It is important to note that the Successor Agreement may have terms that differ materially and substantially from the original agreement. Upon renewal, Itan reserves the right to modify the boundaries of the franchisee's territory according to their then-current guidelines.