Does Itan have the right to retain proceeds from unredeemed gift cards?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
You must fully participate in any gift card, loyalty or membership program we implement in accordance with our policies and procedures. In order to participate, you may be required to purchase additional equipment, software and/or Apps and pay fees relating to the use of that equipment, software and/or Apps. We have the right to determine how membership fees and proceeds from gift card sales are divided or otherwise accounted for and we may retain proceeds from unredeemed gift cards. We may require that all Salons operate under a membership model, in which case your Salon must honor memberships and the associated benefits and privileges even if the member purchased their membership from another Salon. We may establish policies and procedures for the transfer of membership accounts between Salons.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 22–31)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, franchisees must participate in any gift card program that Itan implements. As part of this program, Itan retains the right to determine how proceeds from gift card sales are divided or accounted for. Importantly, Itan explicitly states that it "may retain proceeds from unredeemed gift cards."
This means that if a customer purchases a gift card for an Itan salon but never redeems it, Itan has the right to keep the money. This is a significant point for prospective franchisees to consider, as unredeemed gift card balances can represent a substantial amount of potential revenue. While the franchisee initially sells the gift card, the revenue from unredeemed cards may not benefit the franchisee directly.
It is common in many franchise systems for the franchisor to manage gift card programs and retain a portion of unredeemed balances to offset the costs of administering the program or to contribute to a brand fund. However, the specific terms can vary widely. Therefore, a prospective Itan franchisee should seek clarification from Itan regarding the historical data on gift card redemption rates and the specific allocation of unredeemed gift card proceeds. Understanding these details is crucial for accurately forecasting potential revenue and profitability.