What does the 'Development Fee' cover for an Itan area development agreement?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
"Development Fee" means the development fee described in §6 that you must pay us upon execution of this Agreement, and which is deemed to include the initial franchise fee for all Required Salons referred to in the Development Schedule.
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.
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 paid upon the execution of the Area Development Agreement. This fee covers the initial franchise fee for all Required Salons outlined in the Development Schedule. The specific amount of the Development Fee is detailed in Part B of ATTACHMENT "A" of the agreement.
In simpler terms, when an area developer signs an agreement with Itan to develop multiple salon locations, they pay a Development Fee upfront. This fee essentially prepays the initial franchise fees for each of the salons that the developer is obligated to open according to the Development Schedule. This means the developer won't have to pay a separate initial franchise fee for each of those required locations.
It's important to note that the Development Fee, along with the initial franchise fees it covers, are considered fully earned and nonrefundable once Itan receives them. Therefore, a prospective area developer should carefully consider the Development Schedule and their ability to meet the development obligations before entering into the agreement and paying the Development Fee. This is a common practice in area development franchise agreements, where the upfront fee secures the rights to develop a territory and covers the initial franchise fees for the committed locations.