How is the Development Fee calculated for an Itan development agreement?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
- 6. DEVELOPMENT FEE. Upon execution of this Agreement, you must pay us a development fee (the "Development Fee") in the amount set forth in Part B of ATTACHMENT "A". The Development Fee is calculated as the sum of the initial franchise fees applicable to all Required Salons listed in the Development Schedule. The Development Fee, and the initial franchise fees for the Required Salons comprised by the Development Fee, are fully earned and nonrefundable upon receipt.
| INITIAL FRANCHISE FEE & DEVELOPMENT FEE | ||
|---|---|---|
| Salon | Development Fee | |
| Salon 1 | $49,500 | N/A – 3 unit minimum for ADA |
| Salon 2 | $42,000 | N/A – 3 unit minimum for ADA |
| Salon 3 | $38,000 | $129,500 |
| Salon 4 | $36,000 | $165,500 |
| Salon 5 | $34,000 | $199,500 |
| Salon 6 | $32,000 | $231,500 |
| Salon 7+ | $30,000 (per Salon) Deal Tellis | $261,500 (plus additional $30,000 for each Salon in excess of 7) |
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the Development Fee is calculated as the sum of the initial franchise fees applicable to all Required Salons listed in the Development Schedule. This fee is payable upon execution of the Area Development Agreement. The Development Fee is deemed to include and satisfy the initial franchise fee imposed under each Franchise Agreement the franchisee signs for a Required Salon. The specific amount of the Development Fee is set forth in Part B of ATTACHMENT "A" of the agreement.
For example, the initial franchise fee for Salon 1 is listed as $49,500, Salon 2 is $42,000, and Salon 3 is $38,000. If a Development Agreement requires the franchisee to open three salons, the Development Fee would be $129,500. The Development Fee increases with the number of salons to be opened under the Development Agreement. For Salon 7 and any additional salons, the franchise fee is $30,000 per salon, which would be added to the initial $261,500 fee.
It is important to note that the Development Fee, as well as the initial franchise fees for the Required Salons, are fully earned and nonrefundable upon receipt by Itan. This means that once the agreement is signed and the fee is paid, the franchisee cannot get a refund, even if they do not open all the salons specified in the Development Schedule. Prospective franchisees should carefully consider their ability to meet the development obligations before entering into an Area Development Agreement with Itan.