Can Angry Chickz or its affiliates profit from franchisee purchases and leases?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
selected by you and with our prior written approval.
We and our affiliates may derive revenue and profit based on your purchases and leases, including from charging you for products and services that we or our affiliates provide to you. We and our affiliates may be the sole designated supplier of certain goods and services. Our affiliate Angry Chickz Distribution
LLC (which is owned by an officer in Item 2) manufacturers certain proprietary sauces that are sold to franchisees through broadline distributors. Otherwise, neither we nor our affiliates supply any goods or services to franchisees. During calendar year 2024, that affiliate collected $10,500 attributable to sale of proprietary sauces to franchisees. Except as noted, none of our officers own an interest in any supplier to our franchisees.
You will establish the prices charged for goods and services sold by your Restaurant, and will provide information regarding the prices to us as requested.
If you purchase Authorized Products from an affiliate or us, we or they may derive profits from such purchases. We will not be obligated to reveal our trade secrets and/or Standards of any proprietary items to you or any third party.
If you wish to purchase or use any products or services for or at your Restaurant that we have not yet evaluated or purchase any product or service from a person or entity (a "Proposed Supplier") that we have not yet approved (for products and services that we obligate you to purchase only from designated or approved suppliers), you must submit sufficient information, specifications and samples for us to determine whether the product or service complies with the Standards and specifications and the proposed supplier meets our criteria. For each Proposed Supplier, you must first deliver written notice seeking approval, which notice shall: (a) identify the name and address of the Proposed Supplier, (b) contain such information as may be requested by us or required in the Manual(s), bulletins, electronic communications and/or other directives (which may include financial, operational and economic information regarding its business and product), and (c) identify the products and/or services desired to be purchased or obtained through the Proposed Supplier.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 18–23)
What This Means (2025 FDD)
According to Angry Chickz's 2025 Franchise Disclosure Document, Angry Chickz and its affiliates may derive revenue and profit from franchisee purchases and leases. This includes charging franchisees for products and services that Angry Chickz or its affiliates provide. They may also be the sole designated supplier for certain goods and services. For example, Angry Chickz Distribution LLC, owned by an officer listed in Item 2, manufactures proprietary sauces sold to franchisees through broadline distributors. In 2024, this affiliate collected $10,500 from these sales.
This arrangement means that a portion of a franchisee's expenses will directly contribute to the franchisor's revenue stream. While franchisees establish their own prices for goods and services, they are obligated to purchase many items from approved sources, which may include Angry Chickz or its affiliates. This creates a potential financial benefit for the franchisor based on the franchisee's operational needs.
Angry Chickz also benefits from arrangements with third-party suppliers. They may collect rebates, allowances, credits, or other consideration from suppliers based on franchisee purchases. These benefits can be retained by Angry Chickz or its affiliates, or potentially contributed to the Brand Fund or returned to franchisees. This system gives Angry Chickz considerable control over the supply chain and the potential to increase its revenue through purchasing arrangements.
Prospective franchisees should carefully consider these arrangements and factor them into their financial projections. Understanding the specific products and services that must be purchased from Angry Chickz or its affiliates, as well as the potential costs and benefits associated with these purchases, is crucial for assessing the overall profitability of the franchise.