When does the royalty fee commence for an Itan franchise?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
ll times prior to issuance of the Certificate of Conversion Completion, including throughout the conversion process, you may, but need not, continue to operate the Current Business at the Premises.
- 6. Grand Opening. Section 10.3(a) of the Franchise Agreement is deleted in its entirety. Within the 30-day period following our issuance of the Certificate of Conversion Completion, you must spend a total of at least $5,000 on advertising and other marketing activities to promote the conversion of your Current Business and reopening as an iTAN Salon, including digital advertising, guerilla marketing and public relations. We must approve all such advertising in accordance with §10.3(a) of the Franchise Agreement. We may specify a grand opening marketing program that you must follow.
- 7. Fees. All fees imposed under the Franchise Agreement shall apply, commencing with the execution of the Franchise Agreement, except as otherwise provided below:
- (a) Initial Franchise Fee. If you operated your Current Business for at least one (1) year prior to execution of the Franchise Agreement, your initial franchise fee will be reduced to $15,000; provided however, that if the Franchise Agreement is being executed pursuant to an Area Development Agreement, the foregoing discount shall not apply.
- (b) Royalty and Brand Fund Fee. Your initial payment of royalty fees and brand fund fees shall be due on the first (1st) Wednesday following the Conversion Date and shall be calculated based on Gross Sales generated from the Conversion Date through the close of business on the Sunday immediately preceding your first royalty fee due date. For purposes of clarity, if your Conversion Date occurs on a Monday or Tuesday, your first royalty fee and brand fund fee shall be $0.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the royalty fee commences at different times depending on whether the franchisee is converting an existing business or opening a new franchise. For new franchisees, all fees imposed under the Franchise Agreement, including royalty fees, apply commencing with the execution of the Franchise Agreement, unless otherwise provided.
For franchisees converting an existing business to an Itan salon, the initial payment of royalty fees is due on the first Wednesday following the Conversion Date. This payment will be calculated based on Gross Sales generated from the Conversion Date through the close of business on the Sunday immediately preceding the first royalty fee due date. If the Conversion Date falls on a Monday or Tuesday, the first royalty fee and brand fund fee will be $0. After this initial payment, the royalty fee will continue as set forth in the table provided in the FDD.
Itan franchisees must pay a royalty fee equal to 6.5% of Gross Sales generated during the immediately preceding reporting period. The reporting period runs from Monday through Sunday, and the royalty fee is due the following Wednesday. Itan may periodically change the reporting period and/or royalty fee due date through updates to the Manual.