Does Bombs Away's requirement that goods comply with specifications constitute a designation of a source?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
ARTICLE 8. SUPPLIERS AND VENDORS
- 8.1 Generally. Franchisee shall acquire all Inputs required by Bombs Away Franchising from time to time in accordance with System Standards. Bombs Away Franchising may require Franchisee to purchase or lease any Inputs from Bombs Away Franchising, Bombs Away Franchising's designee, Required Vendors, Approved Vendors, and/or under Bombs Away Franchising's specifications. Bombs Away Franchising may change any such requirement or change the status of any vendor. To make such requirement or change effective, Bombs Away Franchising shall issue the appropriate System Standards.
- 8.2 Alternate Vendor Approval. If Bombs Away Franchising requires Franchisee to purchase a particular Input only from an Approved Vendor or Required Vendor, and Franchisee desires to purchase the Input from another vendor, then Franchisee must submit a written request for approval and any information, specifications and/or samples requested by Bombs Away Franchising. Bombs Away Franchising may condition its approval on such criteria as Bombs Away Franchising deems appropriate, which may include evaluations of the vendor's capacity, quality, financial stability, reputation, and reliability; inspections; product testing, and performance reviews. Bombs Away Franchising will provide Franchisee with written notification of the approval or disapproval of any proposed new vendor within 30 days after receipt of Franchisee's request.
- 8.3 Alternate Input Approval. If Bombs Away Franchising requires Franchisee to purchase a particular Input, and Franchisee desires to purchase an alternate to the Input, then Franchisee must submit a written request for approval and any information, specifications and/or samples requested by Bombs Away Franchising. Bombs Away Franchising will provide Franchisee with written notification of the approval or disapproval of any proposed alternate Input within 30 days after receipt of Franchisee's request.
- 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.
- 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.
- 8.6 Product Recalls. If Bombs Away Franchising or any vendor, supplier, or manufacturer of an item used or sold in Franchisee's Business issues a recall of such item or otherwise notifies Franchisee that such item is defective or dangerous, Franchisee shall immediately cease using or selling such item, and Franchisee shall at its own expense comply with all instructions from Bombs Away Franchising or the vendor, supplier, or manufacturer of such item with respect to such item, including without limitation the recall, repair, and/or replacement of such item.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, franchisees must acquire all required inputs in accordance with the System Standards set by Bombs Away. Bombs Away has the right to require franchisees to purchase or lease inputs from specific sources, including Bombs Away itself, its designees, Required Vendors, Approved Vendors, or according to Bombs Away's specifications.
This means that Bombs Away can mandate where franchisees obtain goods, services, supplies, and equipment necessary for operating the business. These "Inputs" are broadly defined to include almost anything related to the business. Bombs Away can change vendor requirements by issuing updated System Standards.
If Bombs Away requires franchisees to purchase a particular input only from an Approved Vendor or Required Vendor, and a franchisee wants to use a different vendor, the franchisee must request approval in writing. Bombs Away may impose conditions on this approval, assessing the vendor's capacity, quality, financial stability, reputation, and reliability. Bombs Away will provide written notification of approval or disapproval within 30 days of the franchisee's request. Similarly, franchisees need to seek approval for alternate inputs if they wish to deviate from Bombs Away's required purchases.
Bombs Away also has the right to negotiate prices and terms with vendors on behalf of the entire Bombs Away system and may receive rebates or payments from vendors based on franchisee purchases. Bombs Away is not liable for any claims or losses related to products or services provided by Approved or Required Vendors, including defects, delays, or unavailability. If a product recall occurs, franchisees must immediately stop using or selling the item and comply with instructions from Bombs Away or the vendor regarding the recall, repair, or replacement.