Considering the restrictions on suppliers in Item 8, what are the procedures for an Itan franchisee to request approval of a new supplier?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
If you wish to purchase or lease a source-restricted item from a non-approved supplier, you must send us: (a) a written request for approval; (b) product samples for testing purposes; and (c) all additional information we request. The supplier must agree to comply with our minimum insurance, indemnification and confidentiality requirements for system suppliers and allow us to periodically inspect their facility. We may also require that the supplier sign a license agreement with us if the products will bear our Marks. We will notify you of our decision within 30 days after we receive all required information and product samples. We may periodically reinspect approved products and suppliers and revoke our approval if a product or supplier fails to meet our then-current criteria. You must reimburse all costs we incur to evaluate products and suppliers you propose.
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, franchisees must adhere to strict sourcing guidelines for goods and services. A significant portion of a franchisee's expenses, approximately 95% of initial setup costs and 85% of ongoing operating expenses, are subject to these restrictions. This means franchisees are often required to purchase from approved or designated suppliers.
If an Itan franchisee wishes to use a non-approved supplier for source-restricted items, they must first submit a formal written request for approval. This request must include product samples for testing, as well as any additional information requested by Itan. The potential supplier must also agree to comply with Itan's minimum insurance, indemnification, and confidentiality requirements. Furthermore, Itan may require the supplier to sign a license agreement, especially if the products will display Itan's trademarks.
Itan will then evaluate the request, and notify the franchisee of their decision within 120 days of receiving all necessary information and samples. Itan may also periodically reinspect approved products and suppliers, and has the right to revoke approval if the product or supplier no longer meets their standards. The franchisee is responsible for reimbursing Itan for all costs associated with evaluating the proposed products and suppliers. This process ensures Itan maintains quality control and uniformity across all franchise locations.