What is the relationship between Mark King's business experience, as detailed in Item 2, and the restrictions on suppliers imposed on Bft franchisees, as described in Item 8?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 2: BUSINESS EXPERIENCE]
ITEM 2 BUSINESS EXPERIENCE
Mark King: Chief Executive Officer
Since November 2024, Mark King has been our Chief Executive Officer and the Chief Executive Officer of Assetco, each of the Affiliate SPV Franchisors, Lindora Franchisor, each of the Affiliate Prior Franchisors, each of the Former Portfolio Brand Franchisors, each of the Former Portfolio Brand SPV Franchisors, and XFB International. Since June 2024, Mr. King has also been the Chief Executive Officer of XFI. Mr. King was on a sabbatical from January 2024 to May 2024. Mr. King served as the Chief Executive Officer of Taco Bell, a division of Yum! Brands from August 2019 to December 2023. Mr. King is based in Irvine, California.
[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.
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, Item 2 provides details on the business experience of key figures like Mark King, the Chief Executive Officer. His experience, including his role as CEO of Taco Bell from August 2019 to December 2023, suggests a strong background in managing and leading large franchise systems. Item 8 outlines Bft's rights regarding supplier relationships, including negotiating prices and potentially receiving compensation from approved suppliers. This structure allows Bft to manage the supply chain and potentially generate revenue through supplier agreements.
The FDD indicates that Bft may negotiate purchase arrangements with suppliers, establish strategic alliances, and even limit the number of approved suppliers for franchisees. This enables Bft to maintain quality control and potentially leverage its system-wide purchasing power to secure better deals. In 2024, Bft received $154,772 in allowances, rebates, or other consideration from vendors, which constituted 6.3% of their total revenue of $2,447,103. Additionally, Xponential received $6,837,252 in similar allowances from vendors across all Xponential brands. These revenues can be used by Bft for purposes they deem appropriate.
For a prospective Bft franchisee, this means that while they are required to purchase certain products and services from approved suppliers, Bft's leadership, like Mark King, brings experience in managing large franchise systems, which could benefit franchisees through potentially better negotiated supply costs and quality control. However, franchisees have limited choice in selecting suppliers and must comply with Bft's approved vendor list. It is important for potential franchisees to understand how these restrictions may impact their operational costs and profitability, and to evaluate whether the benefits of the franchisor's negotiated deals outweigh the limitations on supplier choice.