Does the Bombs Away franchise agreement allow franchisees to purchase goods from sources other than those designated by the franchisor if comparable quality is available?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
8.1 Generally. Franchisee shall acquire all Inputs
- "Approved Vendor" means a supplier, vendor, or distributor of Inputs which has been approved by Bombs Away Franchising.
"Input" means any goods, services, supplies, fixtures, equipment, inventory, computer hardware and software, real estate, or comparable items related to establishing or operating the Business.
"Required Vendor" means a supplier, vendor, or distributor of Inputs which Bombs Away Franchising requires franchisees to use.
- 8.4 Purchasing. Bombs Away Franchising may negotiate prices and terms with vendors on behalf of the System. Bombs Away Franchising may receive rebates, payments, or other consideration from vendors in connection with purchases by franchisees. Bombs Away Franchising has the right (but not the obligation) to collect payments from Franchisee on behalf of a vendor and remit the payments to the vendor, and to impose a reasonable markup or charge for administering the payment program. Bombs Away Franchising may implement a centralized purchasing system.
- 8.5 No Liability of Franchisor. Bombs Away Franchising shall not have any liability to Franchisee for any claim or loss related to any product provided or service performed by any Approved Vendor or Required Vendor, including without limitation defects, delays, or unavailability of products or services.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
Based on the 2024 Bombs Away Franchise Disclosure Document, franchisees are required to acquire all goods, services, supplies, and equipment necessary to operate their business, known as "Inputs", from suppliers approved or required by Bombs Away. The FDD defines both "Approved Vendor" and "Required Vendor," indicating that Bombs Away designates specific suppliers franchisees must use.
This means a Bombs Away franchisee's ability to choose suppliers is restricted. Bombs Away has the authority to negotiate prices and terms with vendors on behalf of the entire franchise system and may also receive financial benefits, such as rebates, from these vendors based on franchisee purchases. Bombs Away also has the right to collect payments from franchisees on behalf of the vendor.
While the FDD defines "Approved Vendor" and "Required Vendor", it does not explicitly state whether a franchisee can use alternative suppliers if they offer comparable quality. It is important to note that Bombs Away is not liable for any claims or losses related to products or services provided by Approved or Required Vendors, including defects or delays. Therefore, a prospective franchisee should clarify with Bombs Away under what specific conditions, if any, they can use alternative suppliers that meet the System Standards.