Is 360 Painting required to provide franchisees with an accounting of payments, discounts, or other amounts received from suppliers?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
the aggregate amount of franchisee purchases.
We and our affiliates will derive revenues or other material consideration as a result of required purchases or leases by franchisees. We may use any payments, discounts, or other amounts received from suppliers, lessors, or other parties in connection with those arrangements without restriction. We are not required to give you any accounting of those payments, discounts or other amounts or share the benefit of them with you. Any such amounts may be kept by us as compensation for locating and negotiating with suppliers for the System. We do not provide material benefits to franchisees based on their use of designated or approved suppliers.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 23–26)
What This Means (2025 FDD)
According to 360 Painting's 2025 Franchise Disclosure Document, 360 Painting is not required to provide franchisees with an accounting of payments, discounts, or other amounts received from suppliers. The FDD states that 360 Painting may use any payments, discounts, or other amounts received from suppliers, lessors, or other parties in connection with those arrangements without restriction. These amounts may be kept by 360 Painting as compensation for locating and negotiating with suppliers for the System.
This means that while 360 Painting negotiates with suppliers and may receive benefits like rebates or discounts based on franchisee purchases, they are not obligated to share those benefits with the franchisees directly or provide an accounting of them. This practice is not uncommon in franchising, as franchisors often negotiate with suppliers to leverage the collective buying power of the franchise system.
For a prospective franchisee, this implies that the cost of goods and services might not directly reflect any discounts or rebates 360 Painting receives. The franchisee should focus on the overall value and profitability of the franchise, considering the prices they pay for supplies and services in relation to their revenue and expenses. It would be prudent for a potential franchisee to inquire about the criteria 360 Painting uses for selecting and negotiating with suppliers to understand how these arrangements benefit the entire franchise system, even if the financial details are not transparent.
In 2024, 360 Painting derived $935,482 from franchisee purchases and leases, which represented 11.61% of their total revenue of $10,745,617. This indicates the financial significance of these arrangements to 360 Painting's revenue stream. Franchisees should be aware that a portion of their payments for required products and services contributes to the franchisor's revenue, and they should evaluate whether the overall value and support provided by 360 Painting justify these costs.