Does Bananas Smoothies Frozen Yogurt benefit financially from franchisees purchasing from approved suppliers?
Bananas_Smoothies_Frozen_Yogurt Franchise · 2025 FDDAnswer from 2025 FDD Document
CES OF PRODUCTS AND SERVICES**
You will be required to purchase the prescribed products which currently include but are not limited to, proprietary branded frozen yogurt from our Approved Suppliers. We currently designate Ferraro Foods, PFG, Tapia Brothers, and Kaleel Brothers as Approved Suppliers of proprietary products. We will derive revenue from the purchase of certain proprietary products bought by you. We estimate that the purchase of proprietary and other products by you will represent approximately 0.2% of the initial investment in a franchised restaurant. The cost of equipment purchased in accordance with specifications represents approximately 23% - 31% of your total purchases in connection with the establishment of your restaurant.
We attempt to negotiate purchase agreements with suppliers (including price terms) for the benefit of all Green Leaf's Beyond Great Salads, Bananas Smoothies & Frozen Yogurt, Everything Yogurt, Gretel's Pretzels, South Philly Steaks & Fries, and South Philly Cheesesteaks & Fries restaurants, including those owned by franchisees; however, we (or our affiliates) have the right to retain 100% of all discounts, rebates, commissions or other consideration paid by Approved Suppliers and to use them for whatever purposes we elect and you may claim no rights thereto. The Approved Suppliers may pay us an administrative fee which averages approximately 7% of sales by Approved Suppliers to the Franchised Business. This fee is based on sales to the Franchised Businesses in order to reimburse us for our costs incurred in connection with the administration of the distribution system and product liability requirements. We do not provide material benefits (e.g., renewal or additional franchises) to a franchisee based on his use of designated or Approved Suppliers. During the fiscal year ended December 29, 2024 our affiliates derived revenues of approximately $100,000 from these miscellaneous purchases.
From time to time we collect monies for miscellaneous items such as product purchases, etc. or an advertising item for a specific marketing campaign.
An Approved Supplier of beverage products has agreed, subject to certain conditions, to pay our affiliate, Villa Management, rebates based on purchases from company-owned Green Leaf's and Bananas restaurants, as well as purchases from our Franchisees who choose to sell such supplier's beverage products exclusively. (Our affiliate has agreed to sell such supplier's products exclusively through December 26, 2026 with respect to company-owned restaurants.) Under this program, our Affiliate receives from this Approved Supplier: (1) rebate to be used for various marketing and promotional programs aggregating greater than $5.00 per gallon of postmix products, of which we will remit to you $1.59 per gallon with respect to your purchases, if you participate; (2) a price protection rebate equal to the amount, if any, by which gross weighted average national account prices increase by a certain percentage over the prior year; (3) a $2,500 vendor rebate for each new restaurant that sells the designated vendor's beverage products exclusively and remains open for a contractually agreed period, which rebate we will use in our discretion for marketing and grand opening support of your restaurant; (4) growth incentive rebate based upon a per gallon post mix product purchases by the entire company-owned and franchise system and per case of packaged beverage products that are purchased by the entire company owned and franchise system and (5) rebates of $2.25 per case of packaged beverage products, which are to be used for certain marketing programs. Except as described above, Our Franchisees which participate in the Beverage Program will be able to receive beverage equipment on loan and at a per gallon cost from the supplier for the term of their
franchise or duration of the Beverage Agreement, whichever is first to occur. Franchisees will not receive a portion of the rebates described in Nos. (2) and (5) above, because the amounts involved, if received at all, are so de minimis, that the accounting and calculation involved would be extremely difficult and costly. In addition, the rebates described in No (5), above, will not be shared with our Franchisees, but will be used in their entirety to cover system-wide marketing expenditures. As noted above, under the Franchise Agreement, you have no contractual right to any of these rebates, and we may use them at our discretion.
We have an agreement with an Approved Supplier wherein we have agreed that they are the approved supplier of bottled brand teas and juice drinks, enhanced waters and other beverage products for the Franchised Business. By this agreement, the Approved Supplier will make certain payments to us in exchange for their bottled drinks being the approved non-carbonated beverages which may be offered for the sale
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 31–36)
What This Means (2025 FDD)
According to the 2025 Bananas Smoothies Frozen Yogurt FDD, Bananas Smoothies Frozen Yogurt does benefit financially from franchisee purchases from approved suppliers. The FDD states that Bananas Smoothies Frozen Yogurt will derive revenue from franchisee purchases of certain proprietary products. It is estimated that these purchases will represent approximately 0.2% of the initial investment in a franchised restaurant.
Bananas Smoothies Frozen Yogurt also has the right to retain 100% of all discounts, rebates, commissions, or other consideration paid by Approved Suppliers, and to use them for any purpose they choose. The approved suppliers may also pay Bananas Smoothies Frozen Yogurt an administrative fee, averaging approximately 7% of sales by Approved Suppliers to the Franchised Business. This fee is intended to reimburse Bananas Smoothies Frozen Yogurt for costs related to the administration of the distribution system and product liability requirements.
Additionally, an Approved Supplier of beverage products has agreed to pay Villa Management, a Bananas Smoothies Frozen Yogurt affiliate, rebates based on purchases from company-owned Green Leaf's and Bananas restaurants, as well as purchases from franchisees who choose to sell such supplier's beverage products exclusively. These rebates include marketing and promotional program funds greater than $5.00 per gallon of postmix products (with $1.59 per gallon remitted to participating franchisees), price protection rebates, a $2,500 vendor rebate for each new restaurant that sells the designated vendor's beverage products exclusively, growth incentive rebates, and rebates of $2.25 per case of packaged beverage products for marketing programs. Franchisees do not receive a portion of rebates (2) and (5) because the amounts are de minimis. For bottled brand teas and juice drinks, enhanced waters and other beverage products, the Approved Supplier will make certain payments to Bananas Smoothies Frozen Yogurt in exchange for their bottled drinks being the approved non-carbonated beverages which may be offered for the sale from the Franchised Business.