Does Itan have the discretion to use the brand fund for programs they deem appropriate to improve the system?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
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, Itan has broad discretion over how the brand fund is used. Franchisees are required to pay a brand fund fee equal to 2% of gross sales, which Itan deposits into the fund.
Itan has the authority to use the brand fund for a wide array of activities, including developing advertising and marketing materials, conducting promotions, public relations, brand development, sponsorships, research and development, website development, quality control programs, market research, and improvements to the Itan system.
Specifically, Itan can use the brand fund for "any other programs or activities we deem appropriate to promote or improve the System." This clause grants Itan significant latitude in deciding how to allocate the fund's resources. Itan can also use the fund to cover legal fees for claims against the fund or franchisees related to fund expenditures, as well as direct and indirect labor, administrative, and overhead expenses, including compensation for officers and employees working on brand fund matters. This indicates that Itan has the power to make decisions on how to utilize the brand fund.