Under what conditions can Itan treat the franchise agreement as expired if the franchisee continues to operate after the term?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
If you do not sign a Successor Agreement but continue to operate your Salon after the Term expires, we may either treat this Agreement as: (a) expired as of the Term expiration date with you operating in violation of our rights; or (b) continued on a month-to-month basis (the "Interim Term") until either party provides the other party with 30 days' prior notice of termination of the Interim Term. All your obligations remain in full force and effect during the Interim Term, if
applicable, as if this Agreement had not expired, and all obligations imposed on you upon expiration of the Term will take effect upon termination of the Interim Term.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, if a franchisee continues to operate their salon after the franchise term expires without signing a Successor Agreement, Itan has two options. Itan can treat the agreement as expired from the original expiration date, meaning the franchisee is operating in violation of Itan's rights. Alternatively, Itan can consider the agreement to be continuing on a month-to-month basis, which is referred to as the "Interim Term."
During this Interim Term, all of the franchisee's obligations remain in full effect, as if the original agreement had not expired. Upon the termination of the Interim Term, all obligations that were initially imposed on the franchisee at the expiration of the original term will then take effect.
This clause provides Itan with flexibility in managing franchisees who continue operations beyond the initial term. It allows Itan to either immediately enforce the expiration or to maintain a temporary, month-to-month arrangement while deciding on a longer-term solution. For a franchisee, it is crucial to understand these conditions to avoid potential legal issues or unexpected termination of their operations after the initial term.