Considering the site selection assistance in Item 11, how does Itan ensure compliance with source restrictions in Item 8 during the site evaluation process?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
| OBLIGATION | SECTIONS IN AGREEMENT | DISCLOSURE DOCUMENT ITEM |
|---|---|---|
| a. Site selection and acquisition/lease | FA: 7.1 & 7.2 ADA: 5.1 | Item 7 & Item 11 |
| b. Pre-opening purchases/leases | FA: 6.2, 7.3, 11.7 & 15.1 ADA: Not Applicable | Item 5, Item 7, Item 8 & Item 11 |
| l. Ongoing product/service purchases | FA: 6.2, 6.7 & 11.7 ADA: Not Applicable | Item 8 |
ITEM 8 RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES
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.
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.
What This Means (2025 FDD)
Based on the 2025 FDD, Itan ensures franchisees adhere to source restrictions outlined in Item 8 during site selection by integrating these restrictions into the overall obligations detailed in Item 9 and Item 11. Specifically, Item 9 lists 'Site selection and acquisition/lease' as an obligation, cross-referencing Item 7 and Item 11, which cover site-related aspects, and Item 8, which covers pre-opening purchases/leases. This indicates that compliance with source restrictions is a key consideration from the outset of the site selection and acquisition process.
Item 8 specifies that franchisees must purchase or lease certain 'source-restricted' goods and services, meaning these items must meet Itan's specifications or be acquired from approved or designated suppliers. The manual includes these specifications and supplier lists, and Itan communicates changes via email or updates to the manual. This ensures that franchisees are aware of the approved sources and standards they must adhere to when setting up their salon.
While the FDD excerpts do not explicitly detail the exact mechanisms Itan uses to ensure compliance with source restrictions during the site evaluation process, it is clear that Itan maintains control over supplier selection and product specifications. The FDD states that 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. This high percentage underscores the importance of adhering to the franchisor's approved sources and specifications. A prospective franchisee should seek clarification from Itan on the specific steps taken during site selection to ensure compliance with these source restrictions.