How long does an Itan franchisee have to pay amounts owed to Itan or its suppliers after a demand for payment?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
our failure to timely pay a system supplier may jeopardize the supplier's relationship with us and other franchisees; and (ii) a supplier's termination of its relationship with us or refusal to supply goods or services to our franchisees may cause significant harm to us and our franchisees. Accordingly, you agree to promptly pay all amounts owed to system suppliers except as otherwise permitted by this Section. If you have a bona-fide dispute with a supplier that you believe justifies non-payment or partial payment, you must promptly notify the supplier of the particulars of your Claim and diligently pursue resolution of the Claim or prosecution of appropriate legal action. Any trade debt that remains unpaid more than 30 days after its due date constitutes a material breach of this Agreement unless, before the end of the 30-day period: (i) you and the supplier agree to alternative payment terms; or (ii) you initiate appropriate legal action to contest the trade debt.
- (e) Supplier Payments. If we receive rebates or other consideration from suppliers based on your purchases we may either: (i) pass such amounts through to you; or (b) deposit such amounts into the brand and system development fund.
- (f) Disclaimer of Liability. Provided that we designate or approve system suppliers in good faith, we have no liability to you for their acts, errors or omissions including, without limitation, defective or tainted goods, delayed delivery or inability to meet demand.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, franchisees must promptly pay amounts owed to system suppliers. However, if a franchisee has a legitimate dispute with a supplier, they must promptly notify the supplier and diligently pursue resolution or legal action. Any trade debt remaining unpaid more than 30 days after the due date constitutes a material breach of the Franchise Agreement.
However, this 30-day period can be altered if the franchisee and supplier agree to alternative payment terms or if the franchisee initiates legal action to contest the debt before the 30 days expire. This clause underscores the importance Itan places on maintaining positive relationships with its suppliers, as a franchisee's failure to pay can jeopardize these relationships and harm the entire franchise system.
Regarding payments due directly to Itan, payments are due 10 days after invoicing unless otherwise specified in the agreement. If any amount is not received when due, or if there are insufficient funds, Itan may charge a $100 late fee plus default interest on the past due amount. The interest rate will be the lesser of 18% per annum or the highest rate permitted by law. However, a late fee will not be imposed if sufficient funds were available in the franchisee's account but could not be applied due to the franchisee's failure to record sales or submit gross sales reports in a timely manner, Itan may assess a late fee on the entire amount that was due.