How is the initial royalty and brand fund fee calculated for an Itan franchise conversion?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
- 7. Fees. All fees imposed under the Franchise Agreement shall apply, commencing with the execution of the Franchise Agreement, except as otherwise provided below:
- (b) Royalty and Brand Fund Fee. Your initial payment of royalty fees and brand fund fees shall be due on the first (1st) Wednesday following the Conversion Date and shall be calculated based on Gross Sales generated from the Conversion Date through the close of business on the Sunday immediately preceding your first royalty fee due date. For purposes of clarity, if your Conversion Date occurs on a Monday or Tuesday, your first royalty fee and brand fund fee shall be $0. Commencing with the Conversion Date, your royalty fee shall be as set forth in the table below:
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the initial royalty and brand fund fees for a franchise conversion are calculated based on a specific schedule tied to the conversion date. The initial payment for these fees is due on the first Wednesday following the Conversion Date. The calculation is based on the Gross Sales generated from the Conversion Date through the close of business on the Sunday immediately preceding the first royalty fee due date.
For example, if the Conversion Date falls on a Monday or Tuesday, the franchisee's first royalty fee and brand fund fee payment will be $0. This suggests that Itan provides a short grace period to allow the franchisee to begin generating revenue before the fees are applied.
Commencing with the Conversion Date, the royalty fee will be determined as outlined in the franchise agreement. This means that after the initial period, the standard royalty fee structure applies, as detailed elsewhere in the FDD. This structure likely involves a percentage of gross sales, as is common in franchising.