What is the current requirement for Auntie Annes franchisees regarding obtaining a POS System?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
repare and store new menu items. You may not install on or about your Shop any merchandise, furnishings, interior or exterior décor items, supplies, fixtures, equipment or utensils unless they have been approved by us in writing. You must purchase these items only from an Approved Supplier unless we specify otherwise.
You are required to purchase most of the components of the Computer System that we specify from Approved Suppliers. Currently, we have Approved Suppliers for our POS System and for certain software that you must use in your Shop, including the Learning Management System. We also require you to use designated Approved Suppliers for point-to-point encryption ("P2PE") solutions (hardware and software) that are used in cooperation with your POS System to provide secure and compliant payment processing services. If we require you to use any proprietary software or to purchase any software from a designated vendor, you must execute any software license agreements that we or the licensor of the software require and any related software maintenance agreements. We may require you to maintain certain network connections, which may include using an Internet Service Provider or other communications provider that we approve or designate. Currently, we require you to obtain the POS System from our designated vendor (and we may collect from you the related upfront and ongoing fees for such POS System and pay the vendor on your behalf) and POS System support services from our affiliate.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 54–59)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, franchisees are required to obtain their POS (Point of Sale) system from a designated vendor. Auntie Annes may also collect upfront and ongoing fees associated with the POS system from the franchisee and then pay the vendor on their behalf. Additionally, franchisees must obtain POS system support services from an Auntie Annes affiliate.
This requirement ensures that all Auntie Annes locations use a standardized POS system, which helps maintain consistency and facilitates data collection for the franchise. It also allows Auntie Annes to negotiate better rates and support services for its franchisees. The FDD also states that franchisees must use designated Approved Suppliers for point-to-point encryption (P2PE) solutions (hardware and software) that are used in cooperation with your POS System to provide secure and compliant payment processing services.
For a prospective franchisee, this means they will not have the freedom to choose their own POS system or support provider. While this limits autonomy, it also provides the benefit of a pre-approved system that is known to integrate well with Auntie Annes's operations. It is important for potential franchisees to understand the costs associated with the POS system, including upfront fees, ongoing fees, and support service contracts. Franchisees should also inquire about the terms and conditions of the POS system support services provided by the Auntie Annes affiliate.
During the fiscal year ended December 31, 2023, Auntie Annes's affiliate, AA, received $722,663 from franchisees for polling and support fees associated with the POS system. This gives potential franchisees an idea of the scale of POS-related fees within the Auntie Annes system. Franchisees are also required to accept major credit cards, participate in the Gift Card and Loyalty Programs, and participate in the in-shop mobile and online ordering program, which may require additional equipment and fees from designated vendors.