Did Azal Coffee or its affiliates receive any revenue in connection with required purchases by franchisees in the year ending December 31, 2023?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
Also, if we or our affiliates directly supply products or services to you, we or they will derive revenue or other material consideration. In the year ending December 31, 2023, neither we nor our affiliates received any revenue in connection with required purchases by our franchisees.
Percentage of Purchases
All of your purchases from us, Designated Suppliers, Approved Suppliers or in accordance with our specifications will represent 90% to 100% of your total purchases in the establishment of your franchise and 90% to 100% of your total purchases in operating your franchise.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 22–25)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, neither Azal Coffee nor its affiliates received any revenue in connection with required purchases by its franchisees for the year ending December 31, 2023. However, Azal Coffee retains the right to receive rebates or other fees from designated and approved suppliers based on sales to franchisees, although they do not currently have such arrangements. If Azal Coffee negotiates and receives rebates in the future, the FDD states that they intend to keep those rebates and not share them with franchisees.
This means that as of the end of 2023, franchisees were not indirectly contributing to Azal Coffee's revenue through markups or commissions on required purchases. However, this could change in the future. Azal Coffee designates certain products and services that franchisees must purchase from them or from a designated supplier. These Designated Products or Services include coffee beans, tea, coffee and tea mixes, equipment, paper products, syrups, sauces, milk, cups, mugs, branded products, coffee supplies, bakery goods, uniforms, and POS system hardware and software.
Franchisees are obligated to purchase between 90% to 100% of their total purchases from Azal Coffee, designated suppliers, or approved suppliers. This high percentage underscores the importance of understanding the pricing and terms associated with these required purchases. While Azal Coffee does not currently share any rebates they might receive, the potential for such arrangements in the future highlights the need for franchisees to stay informed about any changes to supplier agreements and purchasing policies.
Prospective franchisees should inquire about the criteria for becoming an approved supplier and the process for negotiating prices. Understanding these aspects can help franchisees better manage their costs and potentially influence purchasing decisions within the Azal Coffee system.