What is the development fee for an Itan franchisee who opens more than 7 salons?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
| 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 for opening more than 7 salons is $261,500, plus an additional $30,000 for each salon exceeding the seventh. This fee structure applies to franchisees entering into an Area Development Agreement (ADA) with Itan, requiring them to develop multiple locations within a specific territory. The development fee covers the initial franchise fees for all required salons under the development schedule.
For a prospective Itan franchisee, this means a significant upfront investment when committing to develop a larger territory. For example, if a franchisee plans to open 10 salons, the development fee would be $261,500 plus (3 x $30,000), totaling $351,500. This fee is nonrefundable upon receipt, so it's crucial to carefully consider the development schedule and market potential before signing the agreement.
The development fee structure incentivizes multi-unit development, allowing Itan to expand rapidly within a given area. However, it also places a substantial financial burden on the franchisee, who must secure financing and manage the development of multiple locations simultaneously. This approach is common in franchise systems seeking area developers to penetrate markets quickly, but it requires a higher level of business acumen and capital from the franchisee compared to single-unit franchising.
It is important to note that the initial franchise fees are included within the development fee. This means that as the franchisee opens each location, they will not be required to pay an additional initial franchise fee. The franchisee should carefully review the Development Schedule (ATTACHMENT "A") to fully understand the development obligations and timelines associated with the agreement.