If Itan requires or allows the sale of service packages, can they dictate cooperation between franchisees?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
ave the right to: (i) determine how membership fees are divided or otherwise accounted for; (ii) require that all membership fees be paid to us or deposited into a trust account we control for subsequent disbursement to the Salons(s) visited by the member; (iii) adopt policies regarding cooperation
between franchisees relating to members who utilize the services of, or enjoy membership privileges at, multiple Salons; and (iv) designate the use of new Technology Systems to monitor sales and allocate payments to the Salon(s) visited by the member, either in whole or on a percentage basis. Under current policy, you may request that we transfer a customer's account to you if the customer obtains more than 60% of his or her service sessions from your Salon over the course of at least three (3) consecutive active months (if the account is transferred to you and the customer also has a TANOLOGY® lotion membership and incurred their first committed billing prior to the date of the account transfer, then the customer's TANOLOGY® lotion membership may also be assigned to you along with the customer's account). We may charge you a fee of up to $5 in connection with any such transfer. We may require that you utilize the form of membership agreement we specify. We may require you to hire an attorney, licensed in your state, to review the membership agreement and advise you of any changes necessary to comply with local Laws. We must approve any changes prior to implementation.
- (c) Loyalty Program. You must fully participate and implement all required customer loyalty, rewards and other affinity programs designed to increase customer loyalty, generate new customers or improve overall demand for Salons.
- (d) Gift Card Program. You must participate in any gift card program we establish and honor all gift cards, even if purchased from us or another Salon. You may not sell gift cards we have not approved. We have the right to: (i) determine how gift card proceeds are divided or otherwise accounted for; (ii) require that gift card proceeds be paid to us or deposited into a trust account we control for subsequent disbursement to the Salons(s) where the gift card is redeemed; and (iii) retain proceeds from unredeemed gift cards.
- (e) Processing Customer Payments and Account Transfers. We currently provide electronic funds
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, Itan can dictate cooperation between franchisees regarding members who use services or have membership privileges at multiple locations. Itan can designate the use of new Technology Systems to monitor sales and allocate payments to the Salon(s) visited by the member, either in whole or on a percentage basis.
Under the current policy, an Itan franchisee may request a customer's account be transferred to them if the customer gets more than 60% of their service sessions from that franchisee's salon over at least three consecutive active months. If the account is transferred and the customer has a TANOLOGY® lotion membership with a first billing prior to the transfer date, the TANOLOGY® lotion membership may also be assigned to the franchisee. Itan may charge a fee of up to $5 for such a transfer.
Itan may require franchisees to use a specific membership agreement form and to hire a local attorney to review the agreement for compliance with local laws, with any changes requiring Itan's approval. Franchisees must also fully participate in all required customer loyalty, rewards, and other affinity programs. Additionally, franchisees must participate in any gift card program Itan establishes and honor all gift cards, even those purchased from Itan or another salon. Itan has the right to determine how gift card proceeds are divided, require proceeds to be paid to them or deposited into a trust account they control, and retain proceeds from unredeemed gift cards.
Itan also provides electronic funds processing services for customers with membership or service agreements authorizing electronic debiting, for which franchisees must pay a monthly EFT processing fee of $10 per month. This demonstrates Itan's control over customer payment processing and account management across the franchise system.