What is a 'Designated Service Provider' in the context of Aplus franchise operations?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisor has and will continue to engage with designated third parties in its sole discretion to provide Franchisee with operational support, including but not limited to merchandising, promotional, marketing, and other functions on Franchisor's behalf (each, a "Designated Service Provider"). Franchisor shall be available to render advice, discuss problems and offer general guidance to Franchisee during normal business hours by telephone, e-mail, facsimile, newsletters, and other methods. Franchisor does not currently charge for this service; however, Franchisor retains the right to charge a fee for this service should Franchisee be deemed by Franchisor to be utilizing this service too frequently or in an unintended manner. Franchisor's advice or guidance to Franchisee relative to prices for products and services that, in Franchisor's judgment, constitutes good business practice is based upon the experience of Franchisor and its franchisees in operating a Franchised Business and an analysis of costs and prices charged for competitive products and services. Franchisee shall have the right to determine the prices to be charged by the Franchised Business; provided, however, that Franchisor shall have the sole right to: (1) set maximum retail prices, subject to state or federal law, for certain convenience store products; (2) set prices for certain products as part of Franchisee's participation in Programs; and (3) determine the prices to be charged for products sold through the APLUS and/or SUNOCO Internet site, including products sold to persons identified as customers of the Franchised Business.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, a Designated Service Provider is a third party that Aplus engages to provide operational support to franchisees. This support includes merchandising, promotional activities, marketing, and other functions that Aplus would otherwise perform itself. Aplus has the sole discretion to engage these third parties.
For a prospective Aplus franchisee, this means that some of the support and services they receive may come from companies other than Aplus itself. While Aplus is available to offer advice and guidance during normal business hours via various communication methods, Designated Service Providers may handle specific operational aspects of the franchise. Aplus retains the right to charge a fee for their direct services if a franchisee is deemed to be utilizing them too frequently or inappropriately.
It's important to note that while Aplus can offer guidance on pricing based on their experience and market analysis, franchisees ultimately determine the prices charged at their Aplus store. However, Aplus retains the right to set maximum retail prices for certain convenience store products, set prices for products within specific programs, and determine prices for products sold through the Aplus and/or SUNOCO Internet site.
Franchisees should be aware that Aplus or its representatives may make periodic visits to the franchised business for consultation, assistance, and guidance. These visits can be announced or unannounced. Understanding the role and responsibilities of Designated Service Providers is crucial for franchisees to effectively manage their business and leverage the support available to them.