Can Itan deduct past due payments from monies owed to an Itan franchisee by a customer?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
ccounted for; (ii) require that gift card proceeds be paid to us or deposited into a trust account we control for subsequent disbursement to the Salons(s) where the gift card is redeemed; and (iii) retain proceeds from unredeemed gift cards.
- (e) Processing Customer Payments and Account Transfers. We currently provide electronic funds processing services on your behalf with respect to each customer who has signed a membership or other service agreement with you that authorizes electronic debiting of the customer's account for amounts owed to you. You agree to pay us a monthly EFT processing fee of $10 per month for this service. We will credit your Account for the amount of the customer payment less any applicable bank fees or charges.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
Based on the 2025 Itan Franchise Disclosure Document, Itan provides electronic funds processing services on behalf of franchisees for customers with membership or service agreements that authorize electronic debiting. In exchange for this service, Itan charges a monthly EFT processing fee of $10.
The FDD does not explicitly state whether Itan can deduct past-due customer payments from the amounts owed to a franchisee. However, the document does state that if a franchisee has insufficient funds in their account, any excess amounts they owe will be payable upon demand, along with any late fee imposed. Itan may also impose a $100 NSF fee for each instance where there are insufficient funds in the franchisee's account to cover amounts owed when due, or if a check issued by the franchisee is returned due to insufficient funds.
Therefore, a prospective Itan franchisee should clarify with the franchisor the specific policies and procedures regarding customer payment defaults and how these defaults might affect the payments the franchisee receives. Understanding the allocation of risk and responsibility for customer payment issues is crucial for assessing the financial viability of the franchise.