How does Itan define 'Gross Sales' for the purpose of its financial performance representation?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
forth in Item 19 of this Disclosure Document.
"Franchised Salon" means any Salon that is owned by a franchisee.
- "Gross Profit" means the financial performance metric calculated as Gross Sales minus Cost of Goods Sold.
- "Gross Sales" means the total revenue generated from all goods and services sold by the Salon less taxes and customer refunds.
- "Measuring Period" means the period of time commencing January 1, 2024, and expiring December 31, 2024.
- "Qualifying Salon" means any Franchised Salon that satisfies each of the following criteria: (a) the outlet was open and operating throughout the entire Measuring Period; and (b) the outlet provided us with all data we requested in order to prepare the FPR.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 39–42)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, 'Gross Sales' is defined as the total revenue generated from all goods and services sold by the Salon, less taxes and customer refunds. This definition is important for prospective franchisees as it directly impacts the calculation of Gross Profit, which is Gross Sales minus the Cost of Goods Sold. The financial performance representation in Item 19 of the FDD relies on this definition to present data from 28 Qualifying Salons during the Measuring Period, which ran from January 1, 2024, to December 31, 2024.
Understanding this definition is crucial for interpreting the financial performance data presented in Item 19. For example, the table provided shows that the average Gross Sales for these salons was $512,926, with a range from $206,981 to $769,268. This figure represents the total income before deducting costs like Cost of Goods Sold or operating expenses. Itan also specifies that 'Session & Upgrades' means a completed and rendered single service, such as a tan or a photo facial and single amount rendered for upgrading membership.
It's important to note that the Gross Sales figure does not include revenue from all possible sources, as it specifically excludes taxes and customer refunds. Therefore, franchisees should be aware that their actual revenue before these deductions may be higher than the reported Gross Sales. Additionally, the FDD emphasizes that individual results may vary, and there is no assurance that a franchisee will achieve the same level of Gross Sales as the averages presented. Prospective franchisees should consult with their own advisors to develop their own revenue estimates for their specific location and circumstances.
Furthermore, Itan prepared the Gross Profit and Selected Operating Expenses FPR for the Franchised Salons based on data from reports submitted by franchisees and data generated from the point-of-sale system. The FDD also clarifies that there are no material differences between the operations of the Qualifying Salons and the franchised business offered under the Disclosure Document.