May Itan and its affiliates generate a profit from purchases made by franchisees from designated suppliers?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
iate.
Franchisor Revenue from Source-Restricted Purchases
We do not currently serve as an approved or designated supplier, but we may do so in the future. Our affiliate, FDTC, is the exclusive supplier for FIT Bodywraps®. Our affiliate, Evolv, is the exclusive supplier for all TANOLOGY® and BRONZE LUMINESSENCE™ skincare products and CALIFORNIA SPA® Ageless Serum, as well as certain branded supplies, such as name tags, bed tents, iTAN tote bags and key tags. FDTC and Evolv may also sell these products to the public and other retailers through other channels of distribution, although iTAN franchisees enjoy discounted pricing not generally available to other purchasers of these products. We may designate ourselves and our affiliates as approved or designated suppliers for other goods and services in the future. We and our affiliates may generate a profit from these purchases. Except for FDTC and Evolv, no person affiliated with us is currently an approved (or the only approved) supplier. Our Chief Executive Officer owns an interest in us (the franchisor) as well as FDTC and Evolv. There are no other approved or designated suppliers in which any of our officers own an interest.
As of the issuance date of this Disclosure Document, we do not have any relationships with suppliers that involve rebates, payments or other material benefits based upon franchisee purchase or leases. However, we may establish these relationships in the future. If we receive rebates from suppliers based on franchisee purchases, we will either: (a) pass these amounts through to each Salon that purchased from the supplier in proportion to that Salon's total purchases as compared to all other Salons' total purchases; or (b) deposit these amounts into the Brand Fund.
Our total revenue during the fiscal year ended December 31, 2024 was $908,351. During that year, we generated $32,676 in revenue as a result of franchisee purchases or leases (consisting of technology fees and EFT service fees), which represents 3.6% of our total revenue for the year.
During the fiscal year ended December 31, 2024: (a) FDTC generated $41,372.45 in revenue as a result of franchisee purchases or leases; and (b) Evolv generated $101,947.43 in revenue as a result of franchisee purchases or leases. The source of this information is internal financial accounting maintained on QuickBooks.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 18–21)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, Itan and its affiliates may generate a profit from franchisee purchases. Itan's affiliate, FDTC, is the exclusive supplier for FIT Bodywraps®, and Evolv is the exclusive supplier for TANOLOGY® and BRONZE LUMINESSENCE™ skincare products and CALIFORNIA SPA® Ageless Serum, as well as certain branded supplies. iTan franchisees receive discounted pricing on these products, which may not be available to other purchasers.
For the fiscal year ended December 31, 2024, FDTC generated $41,372.45 in revenue, and Evolv generated $101,947.43 in revenue, as a result of franchisee purchases or leases. During that same period, Itan generated $32,676 in revenue as a result of franchisee purchases or leases (consisting of technology fees and EFT service fees), which represents 3.6% of Itan's total revenue for the year, which was $908,351.
Itan estimates that nearly 95% of the total purchases and leases to establish a Salon and 85% of ongoing operating expenses will consist of source-restricted goods or services. These source-restricted purchases include fixtures, furnishings, décor, equipment, technology systems, signage and inventory. Franchisees must purchase FIT Bodywraps® exclusively from FDTC and TANOLOGY® and BRONZE LUMINESSENCE™ skincare products and CALIFORNIA SPA® Ageless Serum exclusively from Itan's affiliates.