How does All Team's requirement to purchase from designated suppliers in Item 8 affect the franchisee's obligations listed in Item 9?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
| OBLIGATION | SECTION IN AGREEMENT | DISCLOSURE DOCUMENT ITEM |
|---|---|---|
| (b) Pre-opening purchases/leases | Section VIII.A of the Franchise Agreement | Item 8 |
| (l) Ongoing product/service | Section XIII of the Franchise Agreement | Item 8 |
| purchases |
FRANCHISEE shall purchase and/or lease all products, services, supplies, computer software and hardware, equipment and materials required for the operation of the business from manufacturers, suppliers, or distributors designated by ATFC, or from other suppliers who meet ATFC's specifications and are able to provide products and equipment in accordance with the standards as to quality, appearance and service, and who adequately demonstrate their ability to supply the franchise needs in a timely and reliable manner. Specification of a supplier may be conditioned on requirements relating to, among other things, frequency of delivery, standards of services, including prompt attention to complaints, as well as payments, contributions, or other consideration to ATFC or its affiliates, any advertising fund and/or otherwise, and may be temporary, in each case in ATFC's reasonable discretion. ATFC may, from time-to-time withhold, condition and/or revoke ATFC's approval of particular items or suppliers in its reasonable discretion. ATFC or its affiliates may receive rebates, commissions, promotional allowances and other benefits from suppliers in relation to items purchased by FRANCHISEE and other franchisees. ATFC has the right to condition or revoke Franchisee's right to participate in any supplier programs if FRANCHISEE is in default under this Agreement.
ATFC may require that samples from other suppliers of any products to be used by FRANCHISEE be delivered to ATFC for testing prior to approval and use. A charge not to exceed the actual cost of the test may be made by ATFC or by an independent testing laboratory designated by ATFC and shall be paid by FRANCHISEE. ATFC shall advise FRANCHISEE within a reasonable period of time of its approval or disapproval of alternate sources of products, services, supplies, suppliers, materials and equipment. The foregoing shall not be construed as an attempt to unreasonably limit the sources from which FRANCHISEE may procure its products, services, supplies and materials. Rather, it is the intention of ATFC that such items conform to ATFC's strict standards and strict specifications as to consistent quality, uniformity and reliability.
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, Item 9 outlines the franchisee's obligations, and it references Item 8 regarding pre-opening and ongoing purchases. Specifically, Item 9(b) addresses 'Pre-opening purchases/leases,' and 9(l) covers 'Ongoing product/service purchases,' both of which are linked to Item 8. This means that the requirement to purchase from designated suppliers, as detailed in Item 8, directly impacts the franchisee's obligations to procure goods and services necessary for both the initial setup and the continued operation of the All Team franchise.
The obligation to purchase from designated suppliers affects several aspects of the franchisee's responsibilities. All Team franchisees must adhere to the approved suppliers for all products, services, supplies, computer software and hardware, equipment, and materials. All Team can specify suppliers based on factors like delivery frequency, service standards, and even payments or contributions to All Team or its affiliates. All Team retains the right to change or revoke approved suppliers, which could force the franchisee to adapt their supply chain accordingly.
This requirement ensures that All Team maintains consistency and quality across all franchise locations. However, it also limits the franchisee's autonomy in choosing suppliers and potentially negotiating better prices. Franchisees are obligated to use approved suppliers, even if they find alternative sources that offer better deals or more favorable terms. While All Team states that it does not intend to unreasonably limit sources, the final decision rests with All Team, and franchisees must comply with these decisions to remain in good standing with the franchise agreement. Therefore, understanding the specifics of Item 8 and its designated suppliers is crucial for prospective All Team franchisees to assess the potential costs and operational constraints.