Does the All States M.E.D. franchise agreement allow the franchisor to review its approval of items or suppliers?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
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13.1.1 Franchisee acknowledges that the reputation and goodwill of the System is based in large part on offering high quality products and services to its customers. Accordingly, Franchisee shall provide or offer for sale or use at the Franchised Business only those services, with the greatest diligence and care
by Franchisee, that Franchisor approves (and which are not thereafter disapproved) and that comply with Franchisor's specifications and quality standards. If required by Franchisor, any such items or services shall be purchased only from Franchisor. Franchisor shall maintain inventory levels for all supplies offered solely by Franchisor at a level sufficient to ensure prompt delivery to all Franchisees. Franchisee shall NOT offer for sale, sell or provide through the Franchised Business or from the Franchised Business any products or services that Franchisor has not approved. Furthermore, Franchisee must offer for sale all services and products currently offered by Franchisor or which will be offered by the Franchisor in the future.
- 13.1.2 Notwithstanding anything contrary in this Agreement, Franchisor has the right to review from time to time its approval of any items or suppliers. Franchisor may revoke its approval of any item, service or supplier at any time by notifying Franchisee and/or the supplier. Franchisee shall, at its own expense, promptly cease using, selling or providing any items or services disapproved by Franchisor. The cost to review a new product or service as proposed by Franchisee shall not exceed $1,000.00 per product or service.
- 13.1.3 Franchisor has the right to designate certain products and services, not otherwise authorized for general use as part of the System, to be offered locally or regionally based upon such factors as Franchisor determines including, but not limited to, franchisee qualifications, test marketing and regional or local differences. Franchisor has the right to give its consent to one (1) or more franchisees to provide certain products or services not authorized for general use as part of the System. Such consent will be b
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to the 2024 All States M.E.D. Franchise Disclosure Document, All States M.E.D. retains the right to periodically review and potentially revoke previously approved items or suppliers. Specifically, All States M.E.D. can, at any time, reverse its approval of any item, service, or supplier by simply notifying the franchisee and/or the supplier.
This provision in the franchise agreement means that an All States M.E.D. franchisee must promptly stop using, selling, or providing any items or services that All States M.E.D. has disapproved. While franchisees can propose new products or services, All States M.E.D. can charge up to $1,000.00 to review each new product or service.
This clause protects All States M.E.D.'s brand standards and quality control. However, it also introduces a degree of uncertainty and potential cost for franchisees, who may need to switch suppliers or discontinue products if All States M.E.D. changes its approvals. Franchisees do not have any rights to products or services that All States M.E.D. approves for only one or a few franchisees.
All States M.E.D. also has the right to retain any volume rebates, markups, or other benefits received from suppliers, and franchisees have no claim to these benefits. All States M.E.D. will provide a list of approved suppliers and specifications in the Operations Manual, which may be revised periodically.