Under what circumstances can Bombs Away require franchisees to purchase exclusively from designated sources?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
comply with any code of ethics or statement of values from Bombs Away Franchising. Franchisee shall not take any action which may injure the goodwill associated with the Marks.
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.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, franchisees may be required to purchase or lease inputs from specific sources. Bombs Away has the authority to mandate that franchisees acquire inputs from Bombs Away itself, Bombs Away's designee, Required Vendors, Approved Vendors, or according to Bombs Away's specifications. These "inputs" refer to any items Bombs Away deems necessary for operation, as outlined by the System Standards. Bombs Away can modify these requirements or change the status of any vendor by issuing updated System Standards.
If a franchisee wishes to purchase a particular input from a vendor not already approved, they must submit a written request for approval. Bombs Away may then evaluate the vendor's capacity, quality, financial stability, reputation, and reliability, and may also conduct inspections, product testing, and performance reviews. Bombs Away will provide written notification of approval or disapproval within 30 days of receiving the franchisee's request.
Bombs Away also retains the right to negotiate prices and terms with vendors on behalf of the entire franchise system. In doing so, Bombs Away may receive rebates, payments, or other forms of consideration from these vendors related to franchisee purchases. Bombs Away can also collect payments from franchisees on behalf of vendors, remit these payments, and impose a reasonable markup or charge for administering this payment program. Bombs Away may implement a centralized purchasing system or establish a purchasing cooperative that franchisees are required to join.