Can Bang Cookies designate themselves or their affiliates as exclusive suppliers of source restricted goods and services?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
We may designate ourselves and our affiliates as exclusive suppliers of source restricted goods and services. We may designate ourselves or a third party as the sole and exclusive supplier irrespective of the existence of competing suppliers. If, in the Manuals, we do not designate a supplier for a particular item, you will purchase all such products, supplies and services from suppliers who meet our specifications and standards. Currently, we are not and our affiliates are not approved suppliers of the source restricted goods and services identified below. Currently no officer of ours owns an interest in any of our designated suppliers.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 24–28)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, Bang Cookies has the authority to designate themselves or their affiliates as the exclusive suppliers for certain goods and services that are deemed 'source restricted.' Source restricted goods and services are those that must adhere to Bang Cookies' specifications and/or be acquired from approved or designated suppliers, which may include Bang Cookies themselves or their affiliates. This designation can be made irrespective of whether competing suppliers exist.
This means that as a Bang Cookies franchisee, you may be required to purchase or lease specific items directly from Bang Cookies or their affiliates. Bang Cookies also reserves the right to include a reasonable markup in the price of these products and services. While the FDD states that currently no officer of Bang Cookies owns an interest in any of their designated suppliers, Bang Cookies and/or its affiliates may receive rebates, payments, and other material benefits from suppliers based on franchisee purchases, and they reserve the right to institute and expand rebate programs in the future.
If a franchisee wishes to use an alternate supplier, they must submit a written request for approval, along with any additional information, samples, and testing data requested by Bang Cookies. Bang Cookies may charge a fee to cover the costs of reviewing and evaluating the proposed alternate supplier, product, or service. Approval is not guaranteed and can be withheld at Bang Cookies's sole discretion.
The FDD estimates that purchases from approved suppliers, including exclusive suppliers, will account for approximately 80% of the franchisee's total purchases and leases when establishing the Franchised Business and about 60% of the ongoing operating expenses. These source-restricted goods and services include items such as system supplies, branded furniture and fixtures, signage, point of sale systems, credit card processing vendors, online ordering systems, and branded marketing materials. Bang Cookies may also require franchisees to exclusively use their designated supplier for social and digital media marketing services and platforms.