How does Big O Tires define an 'Affiliate' in the context of the franchise agreement?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
Acquisition Costs – Big O's wholesale invoice price to acquire Big O Program Products from suppliers (including but not limited to an Affiliate of Big O such as TBC Corporation) less any per unit rebates from tire manufacturers that are fixed, do not fluctuate per unit as purchase volumes increase or decrease and are paid under a rebate program that is more than twelve months in length ("Manufacturers Rebates"). All volume bonuses, quarterly sales allowances, freight allowances, partner and/or supplier bonuses, advertising, marketing or coop payments received from manufacturers or other suppliers or any other payments from suppliers or manufacturers that do not meet the definition of Manufacturers Rebates received by Big O do not reduce Big O's Acquisition Costs.
Source: Item 23 — RECEIPTS (FDD pages 102–535)
What This Means (2025 FDD)
Based on the 2025 Big O Tires Franchise Disclosure Document, the term 'Affiliate' is used within the context of defining 'Acquisition Costs' but is not explicitly defined. The document refers to 'an Affiliate of Big O such as TBC Corporation' when describing how Big O Tires calculates the wholesale invoice price to acquire Big O Program Products from suppliers.
This implies that TBC Corporation is considered an affiliate of Big O Tires, and the term 'affiliate' generally refers to a company or entity that is related to Big O Tires through ownership or control. However, the lack of a formal definition means that the exact scope of what constitutes an affiliate is not clearly delineated in this section.
A prospective franchisee should seek clarification from Big O Tires regarding the precise legal definition of 'Affiliate' within the franchise agreement. Understanding this definition is crucial, as it could impact various aspects of the franchise relationship, including sourcing of products, competitive restrictions, and other obligations.