Can the Itan brand fund be used for charitable donations and events?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
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, the brand fund can be used for charitable donations and events. As an Itan franchisee, you are required to pay a brand fund fee equal to 2% of gross sales on each royalty fee due date. These fees, along with any noncompliance fees, are deposited into the brand fund, which Itan administers.
Itan has the discretion to use the brand fund for various purposes, including developing advertising and marketing materials, conducting promotions, managing public relations, brand development, research and development, website development, quality control programs, market research, and improvements to the Itan system. Importantly, the brand fund can also be used for sponsorships, charitable donations, and events, offering Itan a means to engage in community-focused activities and enhance its public image.
While the brand fund can be used for charitable purposes, Itan does not guarantee that expenditures will be proportionate to the fees paid by franchisees in a specific geographic area or that franchisees will directly benefit in proportion to their contributions. Itan will provide an annual statement of fund operations, detailing deposits and disbursements, available upon request. This provides transparency regarding how the fund is being managed and spent. The brand fund is not a trust, and Itan has no fiduciary obligations to franchisees regarding its administration, meaning Itan has significant control over how the funds are used.
For a prospective franchisee, this means that a portion of their brand fund fees could be used for charitable activities and events that may or may not directly benefit their specific location. While this can contribute to the overall brand image of Itan, franchisees should be aware that they may not see a direct return on their contributions in the form of local marketing or increased sales. Understanding the annual statement of fund operations is crucial for franchisees to stay informed about how their fees are being utilized.