How does the definition of 'you' as a franchisee in Item 1 relate to the restrictions on suppliers imposed on Bft franchisees, as described in Item 8?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 8: RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES]
Right to Receive Compensation and Negotiated Prices
We may, when appropriate, negotiate purchase arrangements, including price terms, with designated and Approved Suppliers on behalf of the System. We may establish strategic alliances or preferred vendor programs with suppliers that are willing to supply some products, equipment, or services to some or all of the Studios in our System. If we do establish those types of alliances or programs, we may: (i) limit the number of Approved Suppliers with whom you may deal; (ii) designate sources that you must use for some or all products, equipment and services; and (iii) refuse to approve proposals from franchisees to add new suppliers if we believe that approval would not be in the best interests of the System.
We and/or our affiliates may receive payments or other compensation from Approved Suppliers or any other suppliers on account of these suppliers' dealings with us, you, or other Studios in the System, such as rebates, commissions or other forms of compensation, which may comprise of fixed payments and/or percentages of overall sales transactions. During the fiscal year 2024, we received $154,772 in allowances, rebates, or other consideration from vendors in connection with purchases by franchisees, which constituted 6.3% of our total revenue of $2,447,103 during the year, and our Predecessor received $594,663 in similar allowances, rebates, and other consideration. Additionally, Xponential received $6,837,252 in allowances, rebates, or other consideration from vendors in connection with purchases by franchisees of all Xponential Brands in the United States and Canada. We may use any amounts that we receive from suppliers for any purpose that we deem appropriate. We and/or our affiliates may negotiate supply contracts with our suppliers under which we are able to purchase products, equipment, supplies, services and other items at a price that will benefit us and our franchisees.
Cooperatives
No purchasing or distribution cooperatives have been formed.
Franchisee Compliance
When determining whether to grant new or additional Franchises, we consider many factors, including your compliance with the requirements described in this Item 8. You do not receive any further benefit as a result of your compliance with these requirements.
Insurance
What This Means (2025 FDD)
Based on the 2025 FDD, Item 8 outlines the restrictions Bft places on franchisees regarding their sources for products and services. Bft may negotiate purchase arrangements with designated and approved suppliers and establish strategic alliances, potentially limiting the number of suppliers a franchisee can use. They can also designate specific sources that franchisees must use for certain products, equipment, and services. Bft can refuse proposals from franchisees to add new suppliers if they believe it would not be in the best interest of the Bft system.
Bft or its affiliates may receive compensation from approved suppliers due to the dealings with the franchisee or other studios within the Bft system. This compensation can take the form of rebates, commissions, or other payments. In 2024, Bft received $154,772 in allowances, rebates, or other consideration from vendors, which was 6.3% of their total revenue of $2,447,103. Xponential received $6,837,252 in allowances, rebates, or other consideration from vendors related to purchases by franchisees of all Xponential brands in the United States and Canada. Bft can use these amounts for any purpose they deem appropriate.
Item 8 also states that when Bft determines whether to grant new or additional franchises, they consider a franchisee's compliance with the requirements described in Item 8. Compliance with these supplier restrictions does not provide any further benefit to the franchisee. As a Bft franchise owner, you are required to obtain and maintain the required insurance coverages at your sole expense, as prescribed in the Franchise Agreement and/or the Learning Management System. Bft may change the required coverages with thirty days written notice.