factual

From whom must a Beggars Pizza franchisee purchase food items and equipment?

Beggars_Pizza Franchise · 2025 FDD

Answer from 2025 FDD Document

ole discretion.

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; specifically, it received rebates for purchases of sodas (approximately $3.00 per gallon), food and paper products (flat fee ranging from approximately $1.00 to $7.00), meat and other pizza toppings ($0.10 per pound), and pizza sauce ($1.00 to $1.50 per case). All rebates, including those generated by affiliate-owned locations, were contributed to the Brand Fund operated by Beg Adv, Inc. and described in Item 11. Laurance Garetto and Cheryl Garetto own an interest in Begcom.

All advertising (including Internet advertising) must meet our specifications as set forth in the Manuals. You must submit to all proposed advertising to us for our approval before use. You may not use any advertising not prepared or previously approved by us within the preceding six months. You must immediately discontinue use of any unapproved (or approved and subsequently disapproved) advertising materials upon your receipt of our written notice. You must participate in all promotional programs that we develop for the System.

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 food items and equipment from designated sources to maintain the consistency and quality of the brand. Beggars Pizza mandates that franchisees buy all spaghetti sauces, pizza sauce spices, cheeses, sausages, pizza dough, spice blends, and paper products from Beggars Pizza, its affiliates, or approved suppliers. Beggars Pizza has developed proprietary recipes for items like pizza dough, spaghetti and pizza sauces, sausage, and secret spice blends, which are part of the Beggars Pizza system. These items are sold through Begcom or other designated suppliers.

Begcom is the designated supplier for additional food items and supplies, some of which bear proprietary marks. Beggars Pizza may also specify other parties as designated suppliers for specified products, materials, supplies, paper goods, fixtures, furnishings, and equipment. Franchisees must purchase these items from Begcom or other designated suppliers to ensure uniform quality and image. Franchisees must use only revolving baking ovens that Beggars Pizza designates or approves.

Beggars Pizza is not obligated to share its standards and specifications for formulas with prospective suppliers, including recipes or ingredients for proprietary or trade secret products. Franchisees must enter into Begcom's Commissary Agreement for the purchase of products designated for purchase from Begcom during the term of the Franchise Agreement and make payments as required under the agreement. 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 desires to purchase products from a non-approved supplier, they must submit a written request to Beggars Pizza for approval, providing evidence of conformity with Beggars Pizza's specifications. The franchisee is responsible for covering the costs of evaluation and testing of the proposed supplier. Beggars Pizza will try to notify the franchisee of its decision within 30 days after receiving the request. If no decision is received within this period, the supplier is deemed unapproved, and the franchisee cannot sell products from that supplier until written approval is granted. Beggars Pizza can revoke approval of products or suppliers if they no longer meet its standards.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.