Can Itan require that sales proceeds from service packages be paid to them or deposited into a trust account?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
If we require or allow Salons to sell service or treatment "series" or "packages" that may be redeemed on multiple visits, we may adopt policies governing cooperation between franchisees relating to customers who purchase a series or package at one Salon and redeem treatments or services at a different Salon.
We have the right to: (a) determine how sales proceeds are divided or otherwise accounted for; (b) require that sales proceeds be paid to us or deposited into a trust account we control for subsequent disbursement to the Salon(s) where services are redeemed; and (c) retain proceeds from unredeemed services.
You must comply with all policies and procedures we specify from time to time.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, Itan has specific rights regarding the sale of service or treatment packages. If Itan requires or allows franchisees to sell service or treatment "series" or "packages" that can be redeemed over multiple visits, they may implement policies governing cooperation between franchisees, especially when customers purchase a package at one salon but redeem the services at another.
Specifically, Itan has the right to determine how the sales proceeds from these packages are divided or accounted for. More importantly, Itan can require that these sales proceeds be paid directly to them or deposited into a trust account that Itan controls. The funds in this trust account would then be disbursed to the Itan salon(s) where the services are actually redeemed. Itan also retains the right to keep any proceeds from unredeemed services within these packages.
As an Itan franchisee, you must comply with all policies and procedures that Itan specifies regarding these service packages. This includes adhering to Itan's decisions on how sales proceeds are divided, potentially remitting sales proceeds to Itan or a trust account, and accepting that Itan may retain proceeds from unredeemed services. This policy ensures that Itan has control over the revenue generated from service packages and can properly allocate funds to the relevant salons, but it also means franchisees may not have immediate access to all sales proceeds.