How often can Itan impose a $500 noncompliance fee for a continuing issue?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
hin the time period we specify to rectify any noncompliance issues revealed by an inspection.
- 11.16.Failure to Comply with Standards. You acknowledge the importance of every one of our standards and operating procedures to the reputation and integrity of the System and goodwill associated with the Marks. If we notify you of a breach of our standards or operating procedures (including failure to submit required reports in a timely manner) and you fail to cure within the time period we prescribe, we may (in addition to our other remedies under this Agreement) impose a noncompliance fee of $500 per occurrence. We may impose a separate $500 fee every 48 hours the same noncompliance issue remains uncured after we impose the initial fee. Any noncompliance fees we collect are paid in consideration of us refraining from exercising our contractual right to terminate this Agreement. If you fail to cure a breach before the expiration of the cure period (if any) and we take steps to cure the breach (for example, obtaining required insurance coverage on your behalf or paying amounts you owe to system suppliers), then you must reimburse
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, Itan can impose a noncompliance fee of $500 each time a franchisee breaches the brand's standards or operating procedures. After Itan notifies the franchisee of the breach, if the issue remains uncured, Itan may impose an additional $500 fee every 48 hours that the noncompliance continues.
This means that if a franchisee fails to correct a breach of Itan's standards, they could face escalating fees. The initial $500 fee is followed by subsequent $500 fees every two days the issue persists. These fees are in addition to any other remedies Itan might pursue under the Franchise Agreement.
It is important to note that these noncompliance fees do not prevent Itan from terminating the Franchise Agreement if the breach continues even after the fees are collected. Additionally, if Itan takes steps to correct the breach themselves, the franchisee is responsible for reimbursing all associated costs and expenses incurred by Itan.