What revenue streams does Itan generate from franchising?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company generates revenues from franchising through individual franchise agreements. In general, the Company's franchise agreements provide for the payment of an initial franchise fee for each opened franchise salon. The franchise agreements also require the franchisees to pay the Company a royalty fee of 6% of sales, with the exception of franchises belonging to a related party (see note 5). The franchise agreements also set forth a fee based on the percentage of sales to be contributed to a marketing fund to be spent on advertising for all locations. This fee can be changed from time to time. During the years ended December 31, 2023 and 2022 the marketing fund contribution rate was 4% of sales.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the company generates revenue through several streams related to its franchise agreements. These include an initial franchise fee that franchisees pay for each salon they open. In addition to this initial fee, Itan also collects ongoing royalty fees, which are calculated as 6% of the franchisee's sales, although there may be exceptions for franchises belonging to related parties.
Another significant revenue stream for Itan is a contribution to a marketing fund. Franchisees are required to contribute a percentage of their sales to this fund, which Itan uses for advertising and marketing efforts across all locations. The FDD states that for the years 2022 and 2023, this contribution rate was set at 4% of sales. However, the agreement allows Itan to change this percentage from time to time, which means prospective franchisees should confirm the current rate.
In summary, Itan primarily earns revenue from its franchisees through initial franchise fees, ongoing royalty payments based on a percentage of sales, and contributions to a marketing fund, also based on a percentage of sales. These revenue streams are typical in the franchise industry, allowing the franchisor to support its franchisees and maintain brand consistency while also profiting from the overall success of the franchise system.