Under what conditions can Itan license third parties to sell competitive or identical goods and services within the Development Territory?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
During the Term we will not develop or operate, or license a third party to develop or operate, a Salon that is physically located within the Development Territory other than: (a) any Salon that is operating, under development, or for which a franchise agreement has been executed, in each case as of the Effective Date, and that is (or will be) located within the Development Territory; and (b) any Salon otherwise permitted by this Section. At any time during the Term we reserve the right to engage in Acquisitions that involve, or subsequently result in, conversion of the acquired or acquiring company's outlets to ITAN® Salons, even if those outlets are located in the Development Territory. We reserve the right to sell, and license third parties to sell, competitive or identical goods and services (including under the Marks) within the Development Territory through Alternative Channels of Distribution.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, Itan retains the right to sell and license third parties to sell competitive or identical goods and services, even under the Itan brand name, within a franchisee's development territory. This is allowed through what Itan terms "Alternative Channels of Distribution."
This means that even though a franchisee is granted a development territory, Itan can still authorize other entities to operate within that same territory, offering similar or the same goods and services. The FDD specifies that this can be done through "Alternative Channels of Distribution," which are not defined in the provided excerpts.
For a prospective Itan franchisee, this represents a significant risk. The franchisee's market share and revenue potential could be negatively impacted if Itan licenses other businesses to compete within the franchisee's territory. It is important for a potential franchisee to understand what Itan considers "Alternative Channels of Distribution" and how this might affect their business before investing in the franchise.