Where are the Itan franchisee's initial 3 months' rent costs included in the estimated initial investment?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
your general manager during our training program.
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- Lease Deposit: This estimate assumes you lease your premises. Rent varies depending on factors such as the size and location of the premises and local market conditions. We expect most Salons will range in size from 1,500 to 2,000 square feet (we recommend 1,700 square feet) and include 10 to 15 rooms, with rent ranging from $1,800 to $8,000 per month. Landlords typically require security deposits equal to 1- or 2 months' rent and may, in addition, require payment in advance of the first and/or last (or more) month's rent. The estimate in the table includes 1 month's security. Your initial 3 months' rent is included under "Additional Funds". Some franchisees may choose to purchase the real estate. The cost to purchase real estate varies so widely that we cannot reasonably estimate the cost.
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- Construction: 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.
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- Signage: You must purchase and install the signage we specify.
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 15–18)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the initial three months' rent is included under "Additional Funds" in the estimated initial investment. The document specifies that rent, estimated to range from $1,800 to $8,000 per month, is part of the expenses covered during the first three months of operation. This "Additional Funds" category also encompasses other operational costs such as payroll, marketing, technology fees ($100 to $180 per month), third-party software fees ($200 to $250 per month), bookkeeping fees ($400 to $600 per month), payroll processing fees ($150 to $200 per month), inventory replenishment, and utilities.
It is important to note that the initial investment table also includes a separate line item for a 'Lease Deposit,' which covers one to two months' rent as a security deposit required by landlords. This is distinct from the 'Additional Funds' allocation for the first three months of operation. The FDD also clarifies that the estimates provided are based on the experiences of Itan's Chief Executive Officer and existing franchisees in Southern California.
Prospective franchisees should carefully consider these estimates and develop a detailed budget with the assistance of a professional advisor. The FDD recommends hiring an accountant or business advisor to help in creating a budget for the construction, opening, and operation of the Salon. Furthermore, Itan requires franchisees to submit a report within 60 days of opening, detailing all expenses incurred during the development and opening phase. This data may be used by Itan to update future versions of the Franchise Disclosure Document, ensuring that the estimates remain relevant and accurate.