What employee-related costs are included in the Labor costs for an Itan franchise, and what is specifically excluded?

According to Itan's 2025 Franchise Disclosure Document, the definition of 'Labor' within the context of selected operating expenses includes a comprehensive range of employee-related costs. These costs encompass employee recruitment, training and professional development, uniforms, payroll (including salaries, hourly wages, bonuses, and commissions), payroll benefits, payroll processing fees, payroll tax, and workers' compensation. Understanding these inclusions is crucial for prospective franchisees as they develop their financial projections. These labor costs represented a median of 29.6% of gross sales for Itan franchises.

However, the definition of 'Labor' specifically excludes the annual salary for the District Manager and any distributions or personal payments made to the business owner. This exclusion is important because it clarifies that the financial performance representations focus on costs directly related to salon staff rather than management-level compensation or owner benefits. This distinction helps potential franchisees better assess the operational labor expenses they are likely to incur.

It's important for prospective Itan franchisees to carefully consider all components of labor costs when evaluating the potential profitability of a franchise. While the FDD provides a detailed list of inclusions and exclusions, franchisees should also factor in potential variations based on their specific location, staffing needs, and local wage rates. Consulting with financial advisors and conducting thorough market research will further refine their understanding of labor expenses and contribute to more accurate financial forecasting.