Can Itan require franchisees to pay gift card proceeds to them or deposit them into a trust account?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) Gift Card Program.
You must participate in any gift card program we establish and honor all gift cards, even if purchased from us or another Salon.
You may not sell gift cards we have not approved.
We have the right to: (i) determine how gift card proceeds are divided or otherwise accounted for; (ii) require that gift card proceeds be paid to us or deposited into a trust account we control for subsequent disbursement to the Salons(s) where the gift card is redeemed; and (iii) retain proceeds from unredeemed gift cards.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, franchisees must participate in any gift card program that Itan establishes and honor all gift cards, even those purchased from Itan or another Itan salon. Franchisees may not sell gift cards that Itan has not approved.
Itan has the right to determine how gift card proceeds are divided or accounted for. Specifically, Itan can require that franchisees pay gift card proceeds to them or deposit the proceeds into a trust account that Itan controls. Itan will then disburse the funds to the Itan salons where the gift cards are redeemed.
Furthermore, Itan retains the rights to proceeds from unredeemed gift cards. This means that if a gift card is never used, Itan keeps the money, not the franchisee. This is a significant point for prospective franchisees to consider, as unredeemed gift card balances can represent a substantial amount of potential revenue.