Does Itan ensure that franchisees benefit directly or in proportion to their brand fund fees?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
We have sole discretion in determining the content, concepts, materials, media, endorsements, frequency, placement, location and all other matters pertaining to marketing or advertising activities. Any surplus in the fund may be invested and we may lend money to the fund if there is a deficit. The fund is not a trust and we have no fiduciary obligations to you with respect to our administration of the fund. In terms of marketing activities paid for by the fund, we do not ensure that: (a) expenditures in (or affecting) a given geographic area are proportionate or equivalent to the brand fund fees paid by franchisees in that geographic area; or (b) franchisees benefit directly or in proportion to their brand fund fees. We will prepare, and make available to you upon request, an annual statement of fund operations, including deposits and disbursements. We may suspend or discontinue the fund at any time upon 30 days' prior notice.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, Itan does not ensure that franchisees directly benefit or receive benefits proportionate to their brand fund fees. Itan has sole discretion over marketing and advertising activities, including content, placement, and frequency. While Itan will provide an annual statement of fund operations upon request, the brand fund is not a trust, and Itan has no fiduciary obligations to franchisees regarding its administration.
This means that Itan franchisees may not see a direct correlation between the amount they contribute to the brand fund and the marketing benefits they receive in their specific geographic area. The brand fund fees are used to promote public awareness of the brand and improve the system, with the franchisee paying 2% of gross sales for the prior reporting period. These fees are deposited into the fund and can be used for various purposes, including advertising, promotions, brand development, research, and even legal fees.
Itan may use the fund to pay for the creation and distribution of marketing materials, or provide online access to these materials, in which case the franchisee must print the materials at their own expense. This arrangement gives Itan significant control over how the brand fund is spent, and while they aim to improve the overall system, there's no guarantee that each franchisee will see a direct or proportional return on their investment. A prospective franchisee should consider this when evaluating the potential benefits of joining the Itan franchise system.