Does the Itan definition of Gross Sales include business interruption insurance proceeds?
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, Gross Sales does include business interruption insurance proceeds. The document defines Gross Sales as 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 means that Itan franchisees must include any payments received from business interruption insurance in their calculation of Gross Sales, which is used to determine royalty fees and other payments to Itan.
However, the definition of Gross Sales also explicitly excludes certain items. These exclusions include 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. It is important for prospective franchisees to understand exactly what is included and excluded from Gross Sales, as this figure directly impacts the amount of royalties and other fees owed to Itan.
The Itan FDD also mentions that the manual may include policies governing how proceeds from the sale of gift cards are treated for 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. Franchisees should carefully review the manual to fully understand how these items affect their Gross Sales calculation.