What is the minimum and maximum number of Itan salons that the Area Development Agreement (ADA) covers?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
ations:
| 2023 | 2022 | |
|---|---|---|
| Franchise locations, beginning of year | 31 | 31 |
| Opened franchise locations | - | := |
| Closed franchise locations | 2 | - |
| Franchise locations, end of year | 29 | 31 |
During 2023 and 2022, the number of franchise locations owned by a related party were five and eight, respectively (see note 5).
NOTE 7 ACCRUED LIABILITIES
Accrued Liabilities consist of the following:
| Accrued payroll | $ | 4,743
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the Area Development Agreement (ADA) signed in December 2023, requires the opening of a specific number of salons over a ten-year period. The ADA mandates a range, specifying that between ten and twenty salons must be opened during this time.
For a prospective Itan area developer, this means committing to a substantial expansion within their designated territory. The minimum of ten salons ensures a significant market presence, while the potential to open up to twenty salons allows for considerable growth and market saturation. This commitment is a key factor in the financial planning and operational strategy for the area developer.
The agreement stipulates that the recognition of the ADA fee is done on a straight-line basis over the ten-year term. This has implications for revenue recognition and financial reporting. The document also mentions contract liabilities associated with the ADA, with specific amounts allocated for different years, such as $115,000 as of December 31, 2023. These financial details are crucial for understanding the overall investment and revenue streams associated with the Area Development Agreement.