Does Itan deposit noncompliance fees into the brand fund?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
10.1. Brand Fund. We administer a brand and system development fund to promote public awareness of our brand and improve our System. On each royalty fee due date, you must pay us a brand fund fee equal to 2% of Gross Sales for the prior reporting period. We deposit all brand fund fees and noncompliance fees we collect into the fund. We may use the fund to pay for any of the following:
(a) developing, administering or distributing advertising and marketing materials and programs
(b) conducting and administering promotions, contests or giveaways;
(c) public and consumer relations and publicity;
(d) brand development;
(e) sponsorships and charitable and non-profit donations and events;
(f) research and development of technology, products and services;
(g) website development and search engine optimization;
(h) development, maintenance and promotion of an ecommerce platform;
(i) development and implementation of quality control programs and customer satisfaction surveys;
(j) conducting market research;
(k) changes and improvements to the System;
(l) fees and expenses charged by advertising agencies we engage to provide marketing services;
(m) collecting and accounting for brand fund fees and preparing financial accountings of the fund;
(n) any other programs or activities we deem appropriate to promote or improve the System;
(o) legal fees to defend Claims brought against the fund (or against you or other franchisees) based on fund expenditures or activities; and
(p) direct or indirect labor, administrative, overhead and other expenses incurred by us and/or our affiliates relating to any of these activities, including salary, benefits and other compensation of any of our (and any of our affiliate's) officers, employees or independent contractors based on time spent working on any brand fund matters described above.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, noncompliance fees are deposited into the brand fund. Specifically, Itan collects a brand fund fee equal to 2% of Gross Sales from franchisees on each royalty fee due date.
In addition to the brand fund fees, Itan also deposits any noncompliance fees collected into the brand fund. These funds are used to promote public awareness of the brand and improve the Itan system. The FDD lists various ways the brand fund can be used, including developing advertising materials, conducting promotions, public relations, brand development, research and development, website development, quality control programs, market research, and improvements to the system.
Itan has sole discretion in determining the content and other matters pertaining to marketing or advertising activities. While an annual statement of fund operations is available to franchisees upon request, Itan does not ensure that expenditures in a geographic area are proportionate to the fees paid by franchisees in that area, nor that franchisees benefit directly in proportion to their brand fund fees. This means that while franchisees contribute to the fund, the benefits they receive may not directly correlate with their contributions.