Does Bombs Away Franchising have an obligation to collect payments from Franchisee on behalf of a vendor?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
- 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. Bombs Away Franchising may establish a purchasing cooperative and require Franchisee to join and participate in the purchasing cooperative on such terms and conditions as Bombs Away Franchising may determine.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, Bombs Away Franchising does not have an obligation to collect payments from franchisees on behalf of a vendor. However, Bombs Away Franchising has the right to collect payments from the franchisee on behalf of a vendor and remit those payments to the vendor. Bombs Away Franchising also has the right to impose a reasonable markup or charge for administering the payment program.
This means that Bombs Away has the option to facilitate payments between franchisees and vendors but is not required to do so. This flexibility allows Bombs Away to potentially streamline the payment process and negotiate better terms with vendors on behalf of the entire franchise system.
For a prospective franchisee, this could mean that Bombs Away might offer a centralized payment system as a convenience, potentially simplifying accounting and vendor relations. However, franchisees should be prepared to handle payments to vendors independently if Bombs Away chooses not to administer the payment program. It would be prudent for a prospective franchisee to inquire about Bombs Away's current practices regarding vendor payments and whether they plan to implement a centralized purchasing system or purchasing cooperative in the future.