Is Beggars Pizza required to enter into a Commissary Agreement with Begcom?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
7.4.3 Purchase products and supplies designated by Franchisor solely from Franchisor, Begcom, or such other designated sources as Franchisor may describe in the Manual or otherwise in writing from time to time.
7.4.3.1 Franchisee must enter into Begcom's then-current commissary agreement ("Commissary Agreement") for the purchase of products designated by Franchisor for purchase from Begcom during the term hereof, and must make payment to Begcom as required thereunder.
7.4.3.2 If Franchisee fails to make any payment in full to Franchisor, its designee, or Begcom for any reason when due under the Agreement, the Commissary Agreement, or otherwise, Franchisor and Begcom may, among other remedies, (a) suspend or refuse shipment to Franchisee of additional products until such payment has been made, and (b) require payment for any or all future shipments of products to be made on a cash-on-delivery basis.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to the 2025 Beggars Pizza Franchise Disclosure Document, franchisees are required to enter into a Commissary Agreement with Begcom LLC. Specifically, the franchisee must enter into Begcom's then-current commissary agreement for the purchase of products designated by Beggars Pizza for purchase from Begcom during the term of the franchise agreement. The franchisee is also obligated to make payments to Begcom as required under the Commissary Agreement. This requirement is further reinforced by the guarantee agreement, which stipulates that the franchisee's principals guarantee the franchisee's obligations under both the Franchise Agreement and the Commissary Agreement with Begcom.
This requirement means that a prospective Beggars Pizza franchisee will be contractually obligated to purchase certain products from Begcom throughout the duration of their franchise agreement. Failure to enter into the Commissary Agreement or to make the required payments to Begcom can result in consequences such as suspension or refusal of product shipments. Both Beggars Pizza and Begcom have the right to suspend or refuse shipment of additional products until payment is made and can also require cash-on-delivery payments for future shipments.
This type of arrangement, where franchisees are required to purchase supplies from a specific supplier, is common in franchising. It allows the franchisor to maintain quality control and consistency across all franchise locations. However, it also means that franchisees may not have the option to seek out lower prices or alternative suppliers for these designated products. The franchisee must store, maintain, and serve all products in strict conformity with Beggars Pizza's standards, specifications, and procedures.
Prospective franchisees should carefully review the Commissary Agreement to understand the specific products they are required to purchase from Begcom, the pricing structure, and the payment terms. They should also consider the potential impact of this requirement on their overall profitability and operational flexibility. It is important to evaluate whether the benefits of brand consistency and quality control outweigh the limitations on purchasing options.