Why must a Beggars Pizza franchisee purchase certain items from Begcom or designated suppliers?
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, franchisees are required to purchase specific items from Begcom or other designated suppliers to ensure uniformity and quality control within the Beggars Pizza system. This requirement applies to essential ingredients like spaghetti sauces, pizza sauce spices, cheeses, sausages, pizza dough, spice blends, and paper products. Beggars Pizza maintains that these restrictions are in place to protect the proprietary recipes, confidential information, and trade secrets that are integral to the brand's identity.
Beggars Pizza has developed specific recipes for items such as pizza dough, spaghetti and pizza sauces, sausage, and secret spice blends. By mandating that franchisees source these items from Begcom or approved suppliers, Beggars Pizza aims to maintain a consistent product quality and customer experience across all franchise locations. Begcom is the designated supplier for certain food items and supplies, some of which bear the Proprietary Marks. Beggars Pizza may also designate other suppliers for specific products, materials, supplies, paper goods, fixtures, furnishings, and equipment.
The FDD also states that Beggars Pizza is not obligated to disclose its standards and specifications for formulas to prospective suppliers, particularly regarding recipes or ingredients considered confidential. Franchisees are required to enter into Begcom's form of commissary agreement for designated products. Failure to make payments to Beggars Pizza, its designee, or Begcom may result in suspension of shipments or a requirement for cash-on-delivery payments. 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.
If a franchisee wishes to use a different supplier, they must submit a written request for approval, bearing the costs of evaluation and testing. Beggars Pizza aims to respond within 30 days, but a lack of response within this period is considered a disapproval. Beggars Pizza can revoke supplier approval if standards are no longer met. This system allows Beggars Pizza to maintain control over its brand standards while allowing franchisees a path to propose alternative suppliers, subject to Beggars Pizza's approval.