What is the royalty rate for an Itan franchise during months 0 through 12 after the conversion date?

According to Itan's 2025 Franchise Disclosure Document, the royalty rate for a converted franchise during the first year is 4.5% of gross sales. This royalty rate applies from months 0 through 12, commencing with the conversion date.

For a prospective Itan franchisee, this means that for every dollar of gross sales generated by the salon during its first year after conversion, 4.5 cents must be paid to Itan as a royalty fee. This fee is a recurring expense that franchisees must factor into their operating costs and financial projections. Gross sales typically include all revenue generated from the sale of tanning services, products, and other related offerings.

The FDD specifies that the initial payment of royalty fees is due on the first Wednesday following the conversion date. The royalty calculation is 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. This means that if the conversion date falls on a Monday or Tuesday, the first royalty fee and brand fund fee will be $0. This initial period with no royalty fee could provide a small financial benefit to franchisees during the initial days after conversion.

It is important for potential Itan franchisees to carefully consider this royalty structure and how it will impact their profitability. Understanding the timing of royalty payments and the calculation method is crucial for managing cash flow and ensuring compliance with the franchise agreement. Franchisees should also inquire about any potential changes to the royalty structure in the future, as the FDD indicates that Itan may periodically change the reporting period and/or royalty fee due date through updates to the Manual.