When is the initial franchise fee considered fully earned by Itan?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
- 13.1. Initial Franchise Fee. You agree to pay us an initial franchise fee in the amount set forth in Part B of ATTACHMENT "A" in one lump sum at the time you sign this Agreement. The initial franchise fee is fully earned by us and nonrefundable once this Agreement is signed.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the initial franchise fee is considered fully earned and nonrefundable once the Franchise Agreement is signed. This means that Itan recognizes the initial franchise fee as revenue as soon as the agreement is executed.
For a prospective Itan franchisee, this implies that the initial franchise fee is nonrefundable once the agreement is signed, regardless of whether the salon ever opens or becomes operational. It is a common practice in the franchise industry for the initial franchise fee to be deemed earned upon signing the agreement, as it compensates the franchisor for the initial services and expenses incurred in granting the franchise.
It is important for potential franchisees to carefully consider this nonrefundable aspect and conduct thorough due diligence before signing the Franchise Agreement. This includes evaluating the market, assessing the location, and understanding all the obligations and responsibilities outlined in the agreement. Franchisees should be certain of their decision before signing, as the initial fee will not be returned even if they later decide not to proceed with the franchise.