Considering the restrictions on suppliers in Item 8, what are the procedures for an Itan franchisee to request a review of the franchisor's approved supplier list, impacting their obligations in Item 9?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
Source-Restricted Purchases and Leases - Generally
You must purchase or lease certain source-restricted goods and services for the development and operation of your Salon. "Source-restricted" means the good or service must meet our specifications or must be purchased from an approved or designated supplier (in some cases, an exclusive designated supplier, which may be us or
an affiliate). The Manual includes our specifications and supplier list. We notify you of changes to our specifications and suppliers by email, updates to the Manual or other means of communication.
Supplier Criteria
Our criteria for evaluating suppliers include standards for: (a) quality, performance, design, appearance and price of the product or service; and (b) dependability, production capabilities, reputation and financial strength of the supplier. Upon request, we will provide you with any objective specifications pertaining to our evaluation of a supplier or product, although certain important subjective criteria (e.g., product appearance, design, functionality, etc.) are important to our evaluation but cannot be described in writing.
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.
Current Source-Restricted Purchases and Leases
We estimate nearly 95% of the total purchases and leases to establish your Salon and 85% of ongoing operating expenses will consist of source-restricted goods or services, as further described below.
Lease
We do not review the terms of your lease.
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, franchisees are obligated to purchase or lease certain goods and services from approved or designated suppliers. These are termed "source-restricted" items, and Itan estimates that nearly 95% of the total purchases and leases to establish a Salon and 85% of ongoing operating expenses will consist of these source-restricted goods or services. This obligation is detailed in Item 9, which outlines the franchisee's responsibilities, including ongoing product/service purchases, which references Item 8.
To request approval of a non-approved supplier, an Itan franchisee must submit a written request, product samples for testing, and any additional information requested by Itan. The potential supplier must agree to comply with Itan's minimum insurance, indemnification, and confidentiality requirements, and allow periodic inspections of their facility. If the products will bear Itan's Marks, the supplier may also be required to sign a license agreement with Itan.
Itan will notify the franchisee of their decision within 30 days after receiving all required information and product samples. Itan retains the right to periodically reinspect approved products and suppliers and can revoke approval if the product or supplier fails to meet their current criteria. The franchisee is responsible for reimbursing all costs Itan incurs to evaluate the proposed products and suppliers. This process directly impacts the franchisee's obligations under Item 9, specifically regarding ongoing product and service purchases, as it dictates from whom they are permitted to source these items.