Can All County require reimbursement of costs and expenses incurred in the supplier approval process from the franchisee or supplier?
All_County Franchise · 2025 FDDAnswer from 2025 FDD Document
We may prescribe procedures for the submission of requests for approval and impose obligations on approved suppliers, which will be incorporated in a written license agreement with the supplier. We may obtain from you and/or the approved supplier's reimbursement of our reasonable costs and expenses incurred in the approval process and on-going monitoring of the supplier's compliance with our requirements. We do not act as an agent, representative or in any other intermediary or fiduciary capacity for you in our relationship with an alternative supplier you propose and we approve. We may impose limits on the number of approved suppliers. We have the right to monitor the quality of goods or services provided by approved suppliers in a manner we deem appropriate and may terminate any supplier who does not meet our quality standards and specifications, as may be periodically in effect. We may disapprove any supplier whom we previously approved, and you may not, after receipt of notice of disapproval, reorder from any supplier we have disapproved.
Source: Item 8 — Restrictions on Sources of Products and Services (FDD pages 16–19)
What This Means (2025 FDD)
According to All County's 2025 Franchise Disclosure Document, All County may seek reimbursement for costs and expenses related to the supplier approval process from either the franchisee or the supplier. Specifically, All County is permitted to obtain reimbursement of their reasonable costs and expenses incurred during both the initial approval process and the ongoing monitoring of the supplier's compliance with All County's requirements. This policy is outlined in Item 8 of the FDD, which addresses restrictions on sources of products and services.
This means that if a franchisee proposes a new supplier, or if an existing supplier needs to be evaluated or monitored, All County can charge the franchisee or the supplier to cover the costs associated with this process. These costs must be reasonable, but the FDD does not specify a limit to these costs. It is important to note that All County does not act as an agent or representative for the franchisee when dealing with a proposed alternative supplier.
This reimbursement provision is fairly common in franchising, as it allows the franchisor to maintain quality control and standards across the franchise system without bearing the entire financial burden of supplier evaluations. However, prospective All County franchisees should inquire about the typical range of these costs and the criteria All County uses to determine what constitutes "reasonable" expenses. Understanding these potential costs is crucial for budgeting and assessing the overall financial viability of the franchise.