Does Itan administer a brand and system development fund?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
10. ADVERTISING & MARKETING.
10.1. Brand Fund. We administer a brand and system development fund to promote public awareness of our brand and improve our System. On each royalty fee due date, you must pay us a brand fund fee equal to 2% of Gross Sales for the prior reporting period. We deposit all brand fund fees and noncompliance fees we collect into the fund. We may use the fund to pay for any of the following:
- (a) developing, administering or distributing advertising and marketing materials and programs
- (b) conducting and administering promotions, contests or giveaways;
- (c) public and consumer relations and publicity;
- (d) brand development;
- (e) sponsorships and charitable and non-profit donations and events;
- (f) research and development of technology, products and services;
- (g) website development and search engine optimization;
- (h) development, maintenance and promotion of an ecommerce platform;
- (i) development and implementation of quality control programs and customer satisfaction surveys;
(j) conducting market research;
(k) changes and improvements to the System;
(l) fees and expenses charged by advertising agencies we engage to provide marketing services;
(m) collecting and accounting for brand fund fees and preparing financial accountings of the fund;
(n) any other programs or activities we deem appropriate to promote or improve the System;
(o) legal fees to defend Claims brought against the fund (or against you or other franchisees) based on fund expenditures or activities; and
(p) direct or indirect labor, administrative, overhead and other expenses incurred by us and/or our affiliates relating to any of these activities, including salary, benefits and other compensation of any of our (and any of our affiliate's) officers, employees or independent contractors based on time spent working on any brand fund matters described above.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, Itan does administer a brand and system development fund. Franchisees are required to contribute to this fund by paying a brand fund fee equal to 2% of their Gross Sales on each royalty fee due date. Itan deposits all brand fund fees and noncompliance fees collected into the fund.
The FDD specifies a range of potential uses for the brand fund, including developing advertising and marketing materials, conducting promotions, public relations, brand development, sponsorships, research and development, website development, e-commerce platform development, quality control programs, market research, system improvements, advertising agency fees, fund administration, and other activities deemed appropriate to promote the system. The fund can also cover legal fees for claims against the fund or franchisees related to fund expenditures, as well as labor, administrative, and overhead expenses incurred by Itan or its affiliates.
Itan has sole discretion over marketing and advertising activities, and the fund is not a trust, meaning Itan does not have fiduciary obligations to franchisees regarding fund administration. While Itan will provide an annual statement of fund operations, there is no guarantee that expenditures will be proportionate to fees paid by franchisees in a specific area or that franchisees will directly benefit in proportion to their fees. Itan can also suspend or discontinue the fund with 30 days' notice.