Are All States M.E.D. franchisees restricted to specific suppliers for leasehold improvements?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
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Leasehold Improvements
You may purchase leasehold improvements from any supplier but must build out your location according to our specifications.
Signage
You must purchase signage according to our specifications.
High-Ceiling Van with Liftgate
You must purchase a high-ceiling van with liftgate pursuant to our specifications, which many include a model or vendor designation.
Whether we or our Affiliates are Approved Suppliers:
We are currently an approved supplier of advertising material, but not the only approved supplier of such items.
Our affiliate is not currently an approved supplier of products or services to franchisees.
Officer Interests in Suppliers:
Our officer, Josino ("Joe") Ferreira, owns an interest in us.
Alternative Suppliers:
We do not maintain written criteria for approving suppliers and thus these criteria are not available to you or your proposed supplier. We do permit you to contract with alternative suppliers if approved by us and they meet our criteria. We charge any costs incurred, up to $1,000, to test another supplier that you propose. If you wish to propose to us another supplier, you may submit the proposed supplier that you wish for us to consider in writing. Your request must include sufficient specifications, photographs, drawings and other information and samples to enable us to determine whether supplier meets our specifications. Your request must also provide confirmation that the supplier is financially sound and carries adequate liability insurance. We will examine the quality of the items and the supplier's ability to supply a sufficient quantity in a timely way with good customer service to determine whether to consider adding the supplier to our list of approved vendors. We will notify you within 30 days if we approve or disapprove of an alternative supplier. If we revoke approval for a supplier, we will provide written notice to you.
Issuance and Modification of Specifications:
We issue specifications and standards to franchisees or approved suppliers through our Operations Manual or through informational bulletins we issue from time to time.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 18–21)
What This Means (2024 FDD)
According to All States M.E.D.'s 2024 Franchise Disclosure Document, franchisees are not restricted to specific suppliers for leasehold improvements. The FDD states that franchisees "may purchase leasehold improvements from any supplier but must build out your location according to our specifications." This means that while franchisees have the freedom to choose their own suppliers for these improvements, they must ensure that the build-out adheres to All States M.E.D.'s standards.
However, All States M.E.D. does impose restrictions on other types of purchases. For example, franchisees must purchase signage according to the franchisor's specifications. They must also acquire a high-ceiling van with a liftgate that meets All States M.E.D.'s requirements, which may include specific models or vendor designations. Additionally, franchisees are obligated to buy computer hardware and software designated by All States M.E.D. and must purchase furniture, fixtures, and equipment from designated vendors or according to the franchisor's specifications.
All States M.E.D. estimates that approximately 70% of a franchisee's expenditures for leases and purchases when establishing their franchised business will be for goods and services that must be purchased from All States M.E.D., its affiliates, approved suppliers, or from another party according to their standards and specifications. On an ongoing basis, about 30% of expenditures will be subject to these restrictions. While franchisees can propose alternative suppliers, All States M.E.D. may charge up to $1,000 to test the proposed supplier. The franchisor will assess the quality of items, the supplier's capacity, and customer service before approval, notifying the franchisee within 30 days of their decision.
Prospective franchisees should carefully review the Operations Manual and any informational bulletins to understand the specific standards and specifications for leasehold improvements and other required purchases. It is also important to understand the process for proposing alternative suppliers and the associated costs and requirements. Understanding these restrictions and requirements is crucial for managing costs and ensuring compliance with the All States M.E.D. franchise agreement.