Can Big Blue Swim School require a Big Blue Swim School franchisee to use a designated insurance broker?
Big_Blue_Swim_School Franchise · 2025 FDDAnswer from 2025 FDD Document
We may periodically designate and approve Brand Standards, manufacturers, suppliers, and/or distributors for the Operating Assets and other services and products we periodically authorize for use or sale by BIG BLUE Swim Schools. You must purchase or lease all Operating Assets and other services and products you use or sell at the School only according to our Brand Standards and, if we require, only from suppliers or distributors we designate or approve (which may include or be limited to us, certain of our affiliates, and/or other restricted sources). We and/or our affiliates may derive revenue based on your purchases and leases, including, without limitation, from charging you (at prices exceeding our and their costs) for services and products we or our affiliates sell you and from promotional allowances, volume discounts, and other amounts paid to us and our affiliates by suppliers that we designate, approve, or recommend for some or all BIG BLUE Swim School franchisees. We and our affiliates may use all amounts received from suppliers, whether or not based on your and other franchisees' prospective or actual dealings with them, without restriction for any purposes we and our affiliates deem appropriate.
7.D.1 If you want to purchase or lease any Operating Assets or other products or services from a supplier or distributor we have not then approved (if we require you to buy or lease the product or service only from an approved supplier or distributor), then you must establish to our reasonable satisfaction that the product or service is of equivalent quality and functionality to the product or service it replaces and the supplier or distributor is, among other things, reputable, financially responsible, and adequately insured for product liability claims. You must pay upon request any actual expenses and TRE we incur to determine whether or not the products, services, suppliers, or distributors meet our requirements and specifications.
7.D.2 We may condition our written approval of a supplier or distributor on requirements relating to product quality and safety; third-party lab testing; prices; consistency; warranty; supply-chain reliability and integrity; financial stability; customer relations; frequency, economy, and efficiency of delivery; concentration of purchases; standards of service (including prompt attention to complaints); and other criteria. We have the right to inspect the proposed supplier's or distributor's facilities and to require the proposed supplier or distributor to deliver product samples or items, at our option, either directly to us or to any third party we designate for testing. If we approve a supplier or
distributor you recommend, you agree that we may allow other BIG BLUE Swim Schools to purchase or lease the Operating Assets or other products or services from those suppliers or distributors without limitation and without compensation to you.
7.D.3 Despite the foregoing, we may limit the number of approved suppliers and distributors with which you may deal, designate sources you must use, and refuse any of your requests for any reason, including, without limitation, because we have already designated an exclusive source (which might be us or one of our affiliates) for a particular item or service or believe that doing so is in the BIG BLUE Swim School network's best interests. You acknowledge that it might be disadvantageous from a cost and service basis to have more than one supplier in a given market area, and that we have the right to consider the impact of any supplier approval on our and our franchisees' ability to obtain the lowest distribution costs and best service. However, we make no guaranty, warranty, or promise that we will obtain the best pricing or most advantageous terms on behalf of BIG BLUE Swim Schools. We also do not guaranty the performance of suppliers and distributors to BIG BLUE Swim Schools. We are not responsible or liable if the products or services provided by a supplier or distributor fail to conform to or perform in compliance with Brand Standards or our contractual terms with the supplier or distributor.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to Big Blue Swim School's 2025 Franchise Disclosure Document, Big Blue Swim School has the right to require franchisees to purchase services from designated or approved suppliers. This includes the ability to mandate that franchisees obtain services, such as insurance, from specific suppliers or distributors that Big Blue Swim School designates or approves. These designated suppliers may include Big Blue Swim School itself, its affiliates, or other restricted sources.
This requirement means that a franchisee may not be able to choose their own insurance broker and may be obligated to use the one specified by Big Blue Swim School. Big Blue Swim School and its affiliates may receive revenue from these required purchases and leases made by franchisees. This revenue can come from charging franchisees prices exceeding their own costs for the services or products, or from promotional allowances and volume discounts paid by the designated suppliers.
If a franchisee wishes to use a supplier or distributor that Big Blue Swim School has not approved, they must demonstrate to Big Blue Swim School's satisfaction that the alternative supplier offers equivalent quality, functionality, and adequate insurance coverage. The franchisee will bear the costs associated with Big Blue Swim School's evaluation of the proposed supplier. Big Blue Swim School may also set conditions for approving suppliers, relating to product quality, safety, pricing, and other criteria. However, Big Blue Swim School does not guarantee the performance of suppliers and distributors to Big Blue Swim Schools.
Big Blue Swim School can limit the number of approved suppliers, designate specific sources, or refuse a franchisee's request for any reason, including having an exclusive source for a particular item or service. While Big Blue Swim School has the right to consider the impact of any supplier approval on distribution costs and service, it does not guarantee the best pricing or most advantageous terms for franchisees. This arrangement gives Big Blue Swim School significant control over the supply chain and service providers used by its franchisees.