What does Itan expect franchisees to do regarding payments to system suppliers?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
we fail to issue our approval within the 120-day period. You must reimburse all costs we incur to review suppliers or goods/services you propose. We need not consider substitute goods or alternative suppliers for goods that are proprietary or branded with our Marks.
- (d) Payment Disputes. You understand that: (i) your failure to timely pay a system supplier may jeopardize the supplier's relationship with us and other franchisees; and (ii) a supplier's termination of its relationship with us or refusal to supply goods or services to our franchisees may cause significant harm to us and our franchisees. Accordingly, you agree to promptly pay all amounts owed to system suppliers except as otherwise permitted by this Section. If you have a bona-fide dispute with a supplier that you believe justifies non-payment or partial payment, you must promptly notify the supplier of the particulars of your Claim and diligently pursue resolution of the Claim or prosecution of appropriate legal action. Any trade debt that remains unpaid more than 30 days after its due date constitutes a material breach of this Agreement unless, before the end of the 30-day period: (i) you and the supplier agree to alternative payment terms; or (ii) you initiate appropriate legal action to contest the trade debt.
- (e) Supplier Payments.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, franchisees are expected to promptly pay all amounts owed to system suppliers. The FDD emphasizes that a franchisee's failure to pay suppliers on time could harm the supplier's relationship with Itan and other franchisees, and could ultimately damage Itan's system.
However, Itan acknowledges that franchisees may have legitimate disputes with suppliers. If a franchisee believes non-payment or partial payment is justified, they must promptly notify the supplier of the specifics of their claim and diligently work to resolve the issue, including pursuing legal action if necessary.
Itan considers any trade debt that remains unpaid more than 30 days after its due date a material breach of the Franchise Agreement. To avoid this, franchisees must either agree to alternative payment terms with the supplier or initiate legal action to contest the debt before the 30-day period ends. Itan also states that if they receive rebates from suppliers based on a franchisee's purchases, they may either pass those rebates on to the franchisee or deposit the rebates into the brand and system development fund.