In Indiana, does a reasonable right of Better Blend to disapprove a supplier constitute designation of a source?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
However, the publication by the franchisor of a list of approved suppliers of goods, supplies, inventories, or services or the requirement that such goods, supplies, inventories, or services comply with specifications and standards prescribed by the franchisor does not constitute designation of a source nor does a reasonable right of the franchisor to disapprove a supplier constitute a designation.
This subdivision does not apply to the principal goods, supplies, inventories, or services manufactured or trademarked by the franchisor.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, specifically the Indiana Rider to the Franchise Agreement, a reasonable right of Better Blend to disapprove a supplier does not constitute designation of a source. This means that while Better Blend may have the right to reject a supplier proposed by the franchisee, this right alone does not mean that Better Blend is designating or mandating a specific source for goods, supplies, inventories, or services.
This provision is important for prospective Better Blend franchisees in Indiana because it clarifies the extent to which they are obligated to purchase from suppliers approved by the franchisor. The Indiana Franchise Act aims to prevent franchisors from unduly restricting franchisees' purchasing options, provided that comparable quality goods are available from alternative sources.
However, it's important to note that Better Blend can still publish a list of approved suppliers or require that goods and services comply with certain specifications and standards. These actions also do not constitute a designation of a source under the Indiana Acts. The exception to this rule is for principal goods, supplies, inventories, or services manufactured or trademarked by Better Blend, which may be required to be purchased directly from them.