Does Itan have fiduciary obligations to franchisees regarding the administration of the brand fund?
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 have fiduciary obligations to franchisees regarding the administration of the brand fund. Itan retains sole discretion in determining all aspects of marketing and advertising activities. Any surplus funds may be invested, and Itan may lend money to the fund in case of a deficit.
Itan does not ensure that marketing expenditures in a specific geographic area are proportionate to the brand fund fees paid by franchisees in that area, nor does it guarantee that franchisees will directly benefit in proportion to their contributions. However, Itan will provide an annual statement of fund operations, including deposits and disbursements, upon request. Itan also reserves the right to suspend or discontinue the fund at any time with 30 days' prior notice.
This arrangement means that while franchisees are required to contribute to the brand fund, Itan has significant control over how the funds are spent, without a legal obligation to act in a fiduciary capacity. Franchisees should be aware that the benefits they receive from the fund's activities may not directly correlate with their financial contributions and that Itan has the latitude to make decisions about the fund's use and continuation.