How does Itan handle the cost of major renewals and betterments to property and equipment?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
nchise rights. The foregoing cap on remodeling expenses does not include the cost of purchasing new equipment. You may not remodel or renovate your Salon without our prior approval. We will not approve any remodeling or renovations that conflict with our then-current standards and specifications. You must maintain your Salon in good order and condition, reasonable wear and tear excepted, and make all necessary repairs, including replacements, renewals and alterations, at your sole expense, to conform to our standards and specifications. Without limiting the generality of the foregoing, you agree to take the following actions at your expense: (a) thorough cleaning, repainting, redecorating of the interior and exterior of the Salon's premises at the intervals we prescribe (or at such earlier times that such actions are required or advisable); and (b) interior and exterior repair of the Salon's premises as needed. You must comply with any maintenance, cleaning or facility upkeep schedule we prescribe.
11.11.System Programs.
- (a) Generally. We may periodically develop and implement membership, loyalty, gift card and other system-wide programs. You must fully participate in all programs we designate as mandatory.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, franchisees are generally responsible for the costs of maintaining and repairing their salons. Specifically, franchisees must maintain their salons in good order and condition, making all necessary repairs, replacements, renewals, and alterations at their own expense to meet Itan's standards.
Itan may periodically require franchisees to remodel and renovate their salons to meet current standards. While there's a limit of $25,000 (adjusted for CPI changes) on required remodeling and renovations within any five-year period, this limit does not include the cost of purchasing new equipment. Moreover, there is no limit on remodeling and renovation costs that Itan may require as a condition for franchise renewal.
Itan's accounting practices, as described in the FDD, also shed light on how these costs are treated from a financial perspective. While maintenance and repairs are expensed as incurred, major renewals and betterments are capitalized. This means that significant improvements are treated as assets and depreciated over their useful lives, rather than being fully expensed in the year they are incurred. This accounting treatment can affect the reported profitability of Itan's corporate-owned locations, as capital expenditures are spread out over time rather than immediately impacting the bottom line.