Does the estimated initial investment for an Itan franchise assume the franchisee will receive a Tenant Improvement (TI) Allowance from the landlord?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
The cost of construction and leasehold improvements varies widely based on a number of factors including:
- the size and condition of the leased space
- whether the premises is first or second generation retail space
- the extent and nature of existing leasehold improvements
- the amount of landlord contributions, if any, towards leasehold improvement costs (a "TI Allowance")
- demolition and construction costs and prevailing wage rates in the local market
Some landlords provide a TI Allowance but increase monthly rent to recapture the TI Allowance and amortize it over the lease term (or part of the lease term). A significant factor in determining whether a landlord will provide a TI Allowance, and if so, the amount, is whether the building is first generation or second generation space. The estimates in the table above assume you do not receive any TI Allowance.
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 15–18)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the estimated initial investment does not assume that franchisees will receive a Tenant Improvement (TI) Allowance from the landlord. The document states that the cost of construction and leasehold improvements can vary widely based on factors such as the size and condition of the leased space, whether the premises is first or second generation retail space, the extent and nature of existing leasehold improvements, and the amount of landlord contributions, if any, towards leasehold improvement costs (a "TI Allowance").
The FDD clarifies that some landlords may provide a TI Allowance but increase monthly rent to recapture it over the lease term. The likelihood of receiving a TI Allowance, and the amount, depends on whether the building is first or second generation space. However, the estimates provided in the initial investment table assume that the franchisee will not receive any TI Allowance.
For a prospective Itan franchisee, this means they should plan their initial investment without relying on a TI Allowance from the landlord. While it's possible to negotiate a TI Allowance, the initial financial planning should account for the full cost of construction and leasehold improvements. This approach ensures that franchisees are prepared for the maximum potential investment and reduces the risk of underfunding the project. Franchisees should investigate the possibility of obtaining a TI Allowance during lease negotiations, but should not depend on it.