Can the Itan brand fund be used for research and development of technology?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
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, the brand fund can be used for research and development of technology, products, and services. The brand fund is administered to promote public awareness and improve Itan's system. Franchisees 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 fund.
Itan has the authority to use the brand fund for a variety of purposes including developing advertising and marketing materials, conducting promotions, public relations, brand development, sponsorships, and charitable donations. Itan can also use the fund for website development, search engine optimization, e-commerce platform development, quality control programs, customer satisfaction surveys, and market research.
Furthermore, the brand fund can be used for changes and improvements to the Itan system, fees charged by advertising agencies, collecting brand fund fees, preparing financial accountings, and any other programs deemed appropriate to promote or improve the system. The fund can also cover legal fees for claims against the fund or franchisees based on fund expenditures, as well as direct or indirect labor, administrative, overhead, and other expenses related to these activities, including compensation for Itan's officers, employees, or independent contractors.
This means that Itan franchisees contribute a percentage of their gross sales to a fund that Itan controls and can allocate to various initiatives, including technological advancements. While franchisees contribute to the fund, Itan retains discretion over how the funds are spent, and there is no guarantee that expenditures will directly benefit franchisees in proportion to their contributions or even benefit franchisees in a specific geographic area.