Does the short-term loan from KHI to the Itan Company accrue interest?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
d in accounts payable on the balance sheets.
In addition, as of December 31, 2023, KHI owned five franchise locations. At the end of 2023, KHI sold all five franchise locations to a third party. Per the franchise agreement, KHI paid no royalty
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, a short-term loan from Kharsa Holdings, Inc. (KHI) to iTan Franchising, Inc. does not accrue interest. As of December 31, 2024, Itan had a $1,700,000 receivable from KHI, and as of December 31, 2023, the receivable was $250,000. This amount is classified as a short-term loan and is documented as "due from related parties" on Itan's balance sheets.
This arrangement is considered a related party transaction because KHI and Evolv Brands, Inc. are under common control of Itan's owner. KHI pays marketing fund fees to Itan, and the companies share common expenses. Such related-party transactions are common in franchise systems, but it is important for prospective franchisees to understand the nature of these transactions and their potential impact on Itan's financial stability.
The fact that the loan does not accrue interest could be seen as a benefit to KHI, but it also means that Itan is not generating income from this receivable. A potential franchisee should consider how these related-party transactions might affect the overall financial health of Itan and whether they comply with standard business practices. It is advisable to seek clarification from Itan regarding the terms and conditions of this loan and other related-party transactions to fully assess any potential risks or benefits.