What is Begcom's role in supplying items to a Beggars Pizza restaurant?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
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You must purchase all spaghetti sauces, pizza sauce spices, cheeses, sausages, pizza dough, spice blends, and paper products used at the Restaurant from us, an affiliate, or a supplier we designate or approve. We have developed certain proprietary, confidential, and trade secret recipes that are part of the System including pizza dough, spaghetti and pizza sauces, sausage, and secret spice blends. We may develop additional trade secret food ingredients. We sell these products through Begcom or other designated suppliers. In addition, Begcom is the designated supplier of certain additional food items and supplies, some of which bear the Proprietary Marks, and we may specify certain other parties as designated suppliers for specified products, materials, supplies, paper goods, fixtures, furnishings, and equipment used or sold at the Restaurant. You must purchase such items from Begcom or the other designated suppliers to assure the uniform quality and image associated with the System and the Restaurant. You must only use revolving baking ovens we designate or approve in the Restaurant.
We are not required to make our standards and specifications for formulas available to prospective suppliers, including the recipes or ingredients for proprietary or trade secret products that we, in our sole discretion, consider confidential.
You must enter into Begcom's form of commissary agreement (the "Commissary Agreement") for the purchase of products we designate for purchase from Begcom during the term of your Franchise Agreement. You must make payment to Begcom as required under the Commissary Agreement. The current Commissary Agreement is attached as Exhibit D to this disclosure document.
If you fail to make any payment in full to us, our designee, or Begcom when due under your Franchise Agreement, your Commissary Agreement, or any other agreement for any reason, we and Begcom may, among other remedies, (a) suspend or refuse shipment to you of additional products until full payment has been made, and/or (b) require payment for all future shipments of products to be made on a cash-on-delivery basis.
We derived no revenues during our fiscal year ending December 31, 2024, from required franchisee purchases. In the year ending December 31, 2024, Begcom derived approximately $6,398,528 in revenue from the sale of approved products to our franchisees and our affiliateowned Beggars Pizza® Restaurants. Beg Adv, Inc. derived approximately $252,148 in rebates or commissions from required franchisee purchases and affiliate-owned Beggars Pizza® Restaurant
purchases from our designated and approved suppliers;
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 15–18)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, Begcom plays a significant role in supplying items to franchisees. Begcom is a designated supplier of specific food items and supplies, some of which bear Beggars Pizza's proprietary marks. Franchisees are required to purchase these designated items from Begcom to ensure uniformity in quality and image across the Beggars Pizza system. Begcom's role is formalized through a Commissary Agreement that franchisees must enter into, dictating the purchase of designated products from Begcom throughout the term of the Franchise Agreement. Franchisees are obligated to make payments to Begcom as stipulated in the Commissary Agreement. Laurance Garetto and Cheryl Garetto own an interest in Begcom. In the year ending December 31, 2024, Begcom derived approximately $6,398,528 in revenue from the sale of approved products to Beggars Pizza franchisees and affiliate-owned restaurants.
Beggars Pizza maintains strict control over its supply chain, mandating that franchisees purchase specific items from approved sources like Begcom. These items include spaghetti sauces, pizza sauce spices, cheeses, sausages, pizza dough, spice blends, and paper products. Beggars Pizza may also designate Begcom or other suppliers for additional products, materials, supplies, paper goods, fixtures, furnishings, and equipment. This control ensures that all products used in Beggars Pizza restaurants meet the franchisor's standards and specifications, contributing to brand consistency.
Failure to make payments to Begcom can result in serious repercussions for a Beggars Pizza franchisee. Beggars Pizza and Begcom reserve the right to suspend or refuse shipments of additional products until full payment is made. They may also require cash-on-delivery payments for all future shipments. This highlights the importance of maintaining a good financial standing with Begcom to ensure a steady supply of essential products for the restaurant's operation.
Beggars Pizza estimates that 95% of a franchisee's expenditures for leases and purchases in establishing the Restaurant and on an ongoing basis will be for goods and services that are subject to sourcing restrictions. This means suppliers must be approved by Beggars Pizza or which must meet their standards or specifications. This high percentage underscores the significant impact of approved supplier relationships, including Begcom, on the financial operations of a Beggars Pizza franchise.