Does Bft reserve the right to negotiate purchase arrangements, including price terms, with designated and Approved Suppliers on behalf of the System?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
w orders for the revoked product, or with the revoked supplier.
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
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 retains the right to negotiate purchase arrangements, including price terms, with designated and Approved Suppliers on behalf of the entire Bft System. This means Bft can leverage the collective buying power of its franchisees to potentially secure better deals on products, equipment, and services. Bft may also establish strategic alliances or preferred vendor programs with suppliers. If Bft establishes these alliances, they may limit the number of Approved Suppliers franchisees can use, designate specific sources for certain items, and refuse new supplier proposals if they are not in the best interest of the System.
This arrangement allows Bft to maintain quality control and standardization across all franchise locations, ensuring a consistent brand experience for customers. However, it also means franchisees may not have the freedom to choose their own suppliers or negotiate their own prices, potentially missing out on local deals or preferred vendors. Franchisees are required to operate their studios in strict conformance with Bft's methods, standards and specifications.
Bft also discloses that they and/or their affiliates may receive payments or other compensation from Approved Suppliers due to the suppliers' dealings with Bft, its franchisees, or other studios within the System. These payments can take the form of rebates, commissions, or percentages of overall sales transactions. In fiscal year 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 during the year. Additionally, 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, and they may negotiate supply contracts that benefit both Bft and its franchisees.
Prospective franchisees should be aware that Bft's control over supplier relationships and purchasing arrangements is extensive. While this may lead to cost savings and quality control, it also limits the franchisee's autonomy in sourcing products and services. It is important for potential franchisees to carefully consider these restrictions and evaluate whether the benefits of the system outweigh the limitations on their purchasing decisions.