For Itan franchises, what is the 'Baseline CPI' used for in the context of CPI adjustments?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
r Account for amounts owed. You must deposit all Gross Sales into the Account and ensure sufficient funds are available for withdrawal before each payment due date. If there are insufficient funds in your Account, any excess amounts you owe will be payable upon demand, together with any late fee imposed pursuant to §13.4. We may also impose a $100 NSF fee for each instance where either: (a) there are insufficient funds in your Account to cover amounts owed when due; or (b) a check you issue to us is returned due to insufficient funds.
- 13.6. CPI Adjustments. We may periodically adjust all fees (including minimum fees) expressed as a fixed dollar amount based on changes to the U.S. Consumer Price Index (CPI). We may periodically review and increase these fees based on CPI changes, but only if the then-current CPI ("Current CPI") is more than 5% higher than the corresponding CPI in effect on: (a) the Effective Date of this Agreement (for the initial fee adjustment); or (b) the date we implemented the last fee adjustment (for subsequent fee adjustments) ("Baseline CPI"). The adjusted fee is calculated by multiplying the current fee by the sum of one (1) plus a fraction: (a) the numerator of which
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the Baseline CPI is a reference point used to determine if fee adjustments are warranted based on changes in the U.S. Consumer Price Index (CPI). Specifically, Itan may review and increase fees if the Current CPI is more than 5% higher than the Baseline CPI. The Baseline CPI is defined as the CPI in effect on either the Effective Date of the Franchise Agreement for the initial fee adjustment, or the date Itan implemented the last fee adjustment for subsequent adjustments.
The adjusted fee is calculated by multiplying the current fee by the sum of one (1) plus a fraction. The numerator of this fraction is the Current CPI minus the Baseline CPI, and the denominator is the Baseline CPI. This formula ensures that fee adjustments are proportional to the actual increase in the CPI relative to the baseline.
For a prospective Itan franchisee, this means that certain fees could increase over time due to inflation, as measured by the CPI. However, these adjustments will only occur if the CPI increases by more than 5% compared to the Baseline CPI. It's important to note that Itan uses the All Urban Wage Earners and Clerical Workers (CPI-W), U.S. City Average (1982-84 = 100), "All Items" index, but may change this to any CPI index series published by the U.S. Department of Labor or any comparable Governmental Authority that Itan deems appropriate. Franchisees will receive at least 60 days' notice before any CPI adjustment becomes effective.