What is an Itan franchisee required to do with all Gross Sales?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
days after signing the Franchise Agreement). You must deposit all Gross Sales into the bank account and ensure sufficient funds are available for withdrawal before each due date. You are responsible for all taxes imposed on you or us based on products, intangible property (including trademarks) or services we provide to you.
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- Definitions: As used in this Disclosure Document, the following capitalized terms have the meanings given to them below:
- "Brand Fund" means the brand and system development fund we currently administer to promote public recognition of our brand and improve our System.
- "Gross Sales" means all gross sums you bill or collect from all goods and services sold, plus all other sums you collect from the operation of your Salon including advertising revenue, sponsorship fees and business interruption insurance proceeds.
Source: Item 6 — OTHER FEES (FDD pages 11–15)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, franchisees are required to deposit all Gross Sales into a designated bank account. This account must have sufficient funds available for electronic withdrawal by Itan on each due date for fees. Gross Sales include all sums billed or collected from goods and services, advertising revenue, sponsorship fees, and business interruption insurance proceeds. However, Gross Sales exclude sales or use taxes, amounts refunded to customers, revenue from the sale of furniture, fixtures, and equipment in the ordinary course of business, and tips retained by staff.
This requirement ensures that Itan can collect its fees, such as royalty and brand fund fees, in a timely manner via Automated Clearing House (ACH) debit. The ACH Authorization Form, which permits Itan to electronically debit the franchisee's bank account, is attached to the Franchise Agreement. Franchisees must manage their cash flow to ensure that the designated account always contains enough funds to cover these withdrawals.
It is important for prospective Itan franchisees to understand how Gross Sales are defined, as this figure is the basis for calculating royalty fees and other payments to Itan. Franchisees should carefully review the Franchise Agreement and the Manual to fully understand the inclusions and exclusions in the Gross Sales calculation, especially regarding gift cards and customer loyalty programs. Maintaining accurate records of sales and exclusions is crucial for compliance and avoiding potential disputes with Itan.