Must a Beggars Pizza franchisee enter into a Commissary Agreement with Begcom?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
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, a franchisee is required to enter into a Commissary Agreement with Begcom. This agreement is for the purchase of products that Beggars Pizza designates. The franchisee must adhere to the payment terms outlined in the Commissary Agreement. The current version of this agreement is included as Exhibit D in the FDD. Laurance Garetto and Cheryl Garetto own an interest in Begcom. Begcom derived approximately $6,398,528 in revenue from the sale of approved products to Beggars Pizza franchisees and affiliate-owned Beggars Pizza Restaurants in the year ending December 31, 2024.
Beggars Pizza maintains strict control over its supply chain to ensure consistency and quality. Franchisees are obligated to purchase specific items, including spaghetti sauces, pizza sauce spices, cheeses, sausages, pizza dough, spice blends, and paper products, from Beggars Pizza, its affiliates, or approved suppliers. Begcom is a designated supplier for certain food items and supplies, some of which bear proprietary marks. Franchisees must use only revolving baking ovens that Beggars Pizza designates or approves.
Beggars Pizza and Begcom have remedies if a franchisee fails to make payments. They can suspend or refuse shipments of additional products until full payment is made or require cash-on-delivery for future shipments. 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 requirement ensures that Beggars Pizza maintains uniformity across all franchise locations, but it also limits the franchisee's flexibility in sourcing products and potentially negotiating better prices with alternative suppliers. Prospective franchisees should carefully review the Commissary Agreement (Exhibit D) to understand the specific terms, conditions, and pricing structures involved. They should also inquire about the process for requesting approval of alternative suppliers, even though approval is not guaranteed.