Does All States M.E.D. have the right to retain volume rebates from suppliers?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
nd 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 based upon the factors in Section 10.4 and shall not create any rights in Franchisee to provide the same products or services.
- 13.1.4 Franchisor has the right to retain volume rebates, markups, and other benefits from suppliers or in connection with the furnishing of supplies. Franchisee shall have no entitlement to or interest in any such benefits.
- 13.1.5 Franchisor shall provide Franchisee, in the Operations Manual or other written or electronic form, with a list of specifications and, if required, a list of Approved Suppliers for some or all of the supplies, furniture, fixtures, inventory, equipment and other approved or specified items and services, and Franchisor may from time to time issue revisions to such list. If Franchisor or an Affiliate is an Approved Supplier, Franchisee shall execute a standard form purchase or supply agreement for the items to be supplied by Franchisor or its Affiliate. If Franchisee desires to utilize any products, services or new technology that Franchisor has not approved (for products and services that require supplier approval), Franchisee shall first send Franchisor sufficient information, specifications and samples for Franchisor to determine whether the service or product complies with its standards and specifications or whether the supplier meets its Approved Supplier criteria. Franchisee shall bear all expenses incurred by Franchisor in connection with determining whether it shall approve an item, service or supplier, not to exceed $1,000.00. Franchisor will decide within a reasonable time (usually thirty [30] days) after receiving the required information whether Franchisee may purchase or lease such items or services or from such supplier. Approval of a supplier may be conditioned on the supplier's ability to provide sufficient quantity of product; quality of prod
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 collect volume rebates, markups, and other benefits from its suppliers. As a franchisee, you are not entitled to any portion of these benefits. This means that any discounts or incentives All States M.E.D. receives from suppliers based on the overall volume of purchases across the franchise network will be kept by All States M.E.D.
This arrangement is fairly common in franchising, as it allows the franchisor to potentially offset costs or generate revenue to support the franchise system as a whole. However, it's important for prospective franchisees to understand that they will not directly benefit from these volume-based savings. Instead, All States M.E.D. may use these funds for system-wide improvements, marketing initiatives, or other activities that could indirectly benefit franchisees.
The FDD also states that All States M.E.D. will provide franchisees with a list of approved suppliers and specifications for various supplies, furniture, fixtures, inventory, equipment, and services. If a franchisee wants to use alternative products, services, or new technology that hasn't been approved, they must first get approval from All States M.E.D., and the franchisee will bear any expenses All States M.E.D. incurs while evaluating the proposed item or supplier, up to a maximum of $1,000.
This approval process ensures that all All States M.E.D. locations maintain consistent standards and quality. While franchisees have the option to suggest new suppliers or products, All States M.E.D. ultimately decides whether to approve them based on factors like product quality, pricing, and the supplier's ability to meet demand. This protects the brand's reputation and ensures that all franchisees operate according to the established system.