Does Beggars Pizza provide material benefits to franchisees based on their use of designated suppliers?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
We negotiate purchase arrangements with some or all of our approved or designated suppliers and we may receive money or other benefits from approved or designated suppliers as a result of your purchases. As of the date of this disclosure document, there are no purchasing or distribution cooperatives. We do not provide material benefits to you based on your purchase of particular products or services or your use of designated or approved suppliers, other than the benefit of our negotiated pricing, but we may terminate your Franchise Agreement if you purchase from unapproved sources in violation of your Franchise Agreement.
We estimate that 95% of your 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 (that is, for which suppliers must be approved by us or which must meet our standards or specifications).
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 do not receive material benefits for using designated or approved suppliers, beyond potentially benefiting from negotiated pricing. The FDD specifies that Beggars Pizza may receive money or other benefits from approved or designated suppliers as a result of franchisee purchases.
Specifically, in the year ending December 31, 2024, Begcom, an entity in which Laurance and Cheryl Garetto own an interest, derived approximately $6,398,528 in revenue from the sale of approved products to franchisees and affiliate-owned Beggars Pizza restaurants. Beg Adv, Inc. derived approximately $252,148 in rebates or commissions from required franchisee and affiliate-owned restaurant purchases from designated and approved suppliers. These rebates included approximately $3.00 per gallon for sodas, flat fees ranging from approximately $1.00 to $7.00 for food and paper products, $0.10 per pound for meat and other pizza toppings, and $1.00 to $1.50 per case for pizza sauce. All rebates were contributed to the Brand Fund operated by Beg Adv, Inc.
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. Franchisees are required to purchase specific items like spaghetti sauces, pizza sauce spices, cheeses, sausages, pizza dough, spice blends, and paper products from Beggars Pizza, its affiliates, or designated/approved suppliers. Franchisees must also enter into Begcom's Commissary Agreement for designated products. Failure to make payments to Beggars Pizza, its designee, or Begcom may result in suspension or refusal of product shipments or require cash-on-delivery payments.