Does the Itan definition of Gross Sales include advertising revenue?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Definitions: As used in this Disclosure Document, the following capitalized terms have the meanings given to them below:
- "Brand Fund" means the brand and system development fund we currently administer to promote public recognition of our brand and improve our System.
- "Gross Sales" means all gross sums you bill or collect from all goods and services sold, plus all other sums you collect from the operation of your Salon including advertising revenue, sponsorship fees and business interruption insurance proceeds. Gross Sales excludes: (a) sales or use taxes; (b) amounts refunded to customers; (c) revenue from the sale of furniture, fixtures and equipment in the ordinary course of business; and (d) tips paid to and retained by staff members as a gratuity. The Manual may include policies governing
the manner in which proceeds from the sale of gift cards are treated for purposes of calculating Gross Sales. The Manual may also provide details on the calculation of Gross Sales relating to membership fees and qualifying purchases and redemptions by members under a customer loyalty or membership program.
Source: Item 6 — OTHER FEES (FDD pages 11–15)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the definition of Gross Sales includes advertising revenue. Specifically, Gross Sales means all gross sums billed or collected from goods and services, plus all other sums collected from the salon's operation, including advertising revenue, sponsorship fees, and business interruption insurance proceeds. This definition is important because Itan franchisees typically pay a percentage of Gross Sales as a royalty fee.
For a prospective Itan franchisee, this means that any revenue generated from advertising activities at their salon will be included when calculating the royalty fees owed to the franchisor. This could include revenue from local advertising campaigns, cooperative advertising programs, or any other advertising initiatives undertaken by the franchisee. It is important for franchisees to keep accurate records of all revenue streams, including advertising revenue, to ensure accurate royalty payments.
However, the definition of Gross Sales also excludes certain items, such as sales or use taxes, amounts refunded to customers, revenue from the sale of furniture, fixtures, and equipment in the ordinary course of business, and tips paid to and retained by staff members as a gratuity. Franchisees should carefully review the complete definition of Gross Sales in the Franchise Agreement and Operations Manual to fully understand what is included and excluded from the calculation of royalty fees.