For Itan franchises, what is the formula used to calculate the adjusted fee after a CPI increase?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
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 is Current CPI minus Baseline CPI; and (b) the denominator of which is Baseline CPI.
We may utilize any CPI index series published by the U.S. Department of Labor or any comparable Governmental Authority that we deem appropriate.
We currently use the following index: All Urban Wage Earners and Clerical Workers (CPI-W), U.S.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, Itan may periodically adjust fees that are expressed as a fixed dollar amount based on changes to the U.S. Consumer Price Index (CPI). These fees can be reviewed and increased if the Current CPI is more than 5% higher than the Baseline CPI, which is the CPI in effect on either the agreement's effective date for the initial adjustment, or the date of the last fee adjustment for subsequent adjustments.
The formula to calculate the adjusted fee involves multiplying the current fee by the sum of one (1) plus a fraction. The fraction's numerator is the Current CPI minus the Baseline CPI, and the denominator is the Baseline CPI. This calculation allows Itan to adjust fees in line with inflation, ensuring that the real value of the fees remains consistent over time.
Itan uses the CPI index series published by the U.S. Department of Labor or a comparable Governmental Authority. Currently, Itan uses the All Urban Wage Earners and Clerical Workers (CPI-W), U.S. City Average (1982-84 = 100), "All Items" index. This ensures that the adjustments are based on a recognized and reliable measure of inflation. It is important to note that Itan will notify franchisees of any CPI adjustment at least 60 days before it takes effect, and no more than one fee adjustment can occur during any five-year period. If Itan chooses not to increase fees despite a qualifying CPI increase, that potential increase can be carried forward and applied in a later fee adjustment.