Can Bft or its affiliates be designated as an approved supplier for items or services?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
ds, you must first obtain our prior written approval as described more fully in this Item.
Approved Suppliers
We have the right to require you to purchase any items or services necessary to operate your Studio from a supplier that we approve or designate (each, an "Approved Supplier"), which may include us or our affiliate(s). We will provide you with a list of our Approved Suppliers in writing as part of the Learning Management System or otherwise in writing, and we may update or modify this list as we deem appropriate. When evaluating and approving Approved Suppliers, we consider a variety of factors. While the prices at which a supplier sells its goods or services is one factor, it is not the only factor we consider. Our designation of an Approved Supplier does not mean that such Approved Supplier's prices will be lower than those of other suppliers.
Currently, we have Approved Suppliers for the following items that you must purchase in connection with the establishment and/or operation of your Studio: (i) Pre-Sales and Soft Opening Retail Inventory Kit, as well as
certain other ongoing inventory items; (ii) the Fitness Equipment & Initial FF&E Package; (iii) the Pre-Opening Instructor Training that your instructors must complete to become Authorized Instructors (and related materials); (iv) certain other exercise equipment/supplies; (v) Audio / Visual Package; (vi) insurance coverage (subject to applicable law where the Studio is located); (vii) shipping and installation services; (viii) training materials associated with the Fundamentals Training Program and the Pre-Opening Instructor Training; and (ix) the POS System and then-current software we require you to use in connection with that POS System and your Studio, including, without limitation, any software and technology we determine to provide to you as part of our System in connection with your then-current Technology Fee.
We may develop proprietary products for use in your Studio, including private-label products that bear our Marks, and require you to purchase these items from us or our affiliate(s).
If you wish to purchase a product or service that we require you to purchase from an Approved Supplier from an alternate source, then you must obtain our prior written approval as outlined more fully in this Item. We may provide our standards and specifications for our Approved Products and Approved Services directly to our Approved Suppliers, and may provide these standards and specifications to an alternative supplier you propose if: (i) we approve the supplier in writing as outlined more fully in this Item; and (ii) the alternative supplier agrees to sign our prescribed form of non-disclosure agreement with respect to any Confidential Information we disclose.
As of the date of this Disclosure Document: (i) other than the Pre-Sales and Soft Opening Retail Inventory Kit, the technology services we provide in exchange for our then-current Technology Fee, and certain services that XPS provides, such as custom millwork, cabinets, tables, display cases, engraved wood signs, point of sale displays, custom acrylic panels, and other similar products, neither we nor any of our affiliates are an Approved Supplier for any items you are required to purchase in connection with your Studio as part of our standard Franchise offering; and (ii) none of our officers own an interest in any of our Approved Suppliers other than us.
We may designate us or any of our affiliates as an Approved Supplier with respect to any other item you must purchase in connection with your Studio in the future.
Required Purchases and Right to Derive Revenue
The products or services we require you to purchase or lease from an Approved Supplier, or purchase or lease in accordance with our System Standards, are referred to collectively as your "Required Purchases." We estimate that your Required Purchases in total will be about 39% to 73% of your total purchases to establish the Studio and about 50% to 66% of your purchases to continue the operation of the Studio. Please be advised that these percentages do not include the lease payments that you make in connection with your Studio.
We and our affiliates may derive revenue from any of the purchases that our System franchisees are required to make in connection with the Studio. In fiscal year 2024, we did not receive any revenue from the sale of goods and services to franchisees, but our Predecessor received $4,727,544 from franchisees.
Non-Approved Product/Service and Alternate Supplier Approval
We may, but are not obligated to, grant your request to: (i) offer any products or services in connection with your Studio that are not Approved Products and Approved Services; or (ii) purchase any item or service we require you to purchase from an Approved Supplier from an alternative supplier.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 32–36)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, Bft has the right to designate itself or its affiliates as an approved supplier for any items or services that franchisees are required to purchase. Bft will provide a list of approved suppliers in writing, which may be updated or modified.
Currently, Bft has approved suppliers for items such as the Pre-Sales and Soft Opening Retail Inventory Kit, the Fitness Equipment & Initial FF&E Package, Pre-Opening Instructor Training, certain exercise equipment/supplies, the Audio/Visual Package, insurance coverage, shipping and installation services, training materials, and the POS System. However, as of the date of the Disclosure Document, neither Bft nor its affiliates are approved suppliers for any other required items, with the exception of the Pre-Sales and Soft Opening Retail Inventory Kit, technology services, and certain services provided by XPS. Bft may develop proprietary products, including private-label products, and require franchisees to purchase these items from Bft or its affiliates.
Bft may negotiate purchase arrangements with approved suppliers on behalf of the System and may establish strategic alliances or preferred vendor programs. If these alliances or programs are established, Bft may limit the number of approved suppliers, designate sources that franchisees must use, and refuse to approve new suppliers if it is not in the best interests of the System. Bft and/or its affiliates may receive compensation from approved suppliers, such as rebates or commissions. In fiscal year 2024, Bft received $154,772 in allowances, rebates, or other consideration from vendors, which constituted 6.3% of its total revenue of $2,447,103. Xponential received $6,837,252 in similar allowances from vendors across all Xponential Brands in the United States and Canada. Bft may use these amounts for any purpose it deems appropriate.
Franchisees can request approval to purchase required items from an alternative supplier, but they must obtain written approval from Bft and may be required to pay an evaluation fee and cover Bft's costs. Bft will consider factors such as the quality of the product, the supplier's production and delivery capability, business reputation, and financial condition. Approved suppliers must comply with Bft's requirements regarding insurance, indemnification, and non-disclosure. Bft may re-inspect or revoke approval of a supplier or item at any time to protect the interests of the System.