Can a Burros Fries franchisee act as an exclusive distributor for a third-party vendor?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
To insure the consistent high quality and uniformity of Products and Services provided by the Franchised Businesses, Franchisee must lease or purchase all products, supplies, kitchen equipment and services (as described above) for use in the operation of its Business, from us, our affiliates or approved vendors who demonstrate to our continuing satisfaction an ability to meet our standards and specifications.
We are not liable to Franchisee for any loss or damage, or deemed to be in breach of this Agreement, if we, our affiliates or approved vendors and/or suppliers cannot deliver, or cause to be delivered, Franchisee's order of products, supplies or kitchen equipment where such items are outof-stock or discontinued.
Franchisee is prohibited from purchasing or leasing products, supplies, kitchen equipment and services from unapproved vendors and/or suppliers who are not on our approved list without our written approval.
We shall approve or deny Franchisee's request, which approval is in our sole discretion, within thirty (30) days of receipt of Franchisee's written request.
Such approval or disapproval shall be made by email or any other form of written communication.
Failure of Franchisee to purchase such items from us, our affiliates or approved vendors and/or supplies and use such unapproved items in the operation of its Business may result in termination of this Agreement as specified in Section 23.C of this Agreement.
In approving any vendor or supplier we may consider factors such as: price, quality, composition, performance, accuracy of product claims, durability, safety, technical specifications, frequency of delivery, design, service maintenance programs, determination of quality control, value, customer service strength, prompt attention to complaints, litigation against the supplier, reputation of supplier, any product recalls instituted by the United States Consumer Product Safety Commission, the supplier's financial strength and capacity to supply franchisee's needs promptly, reliably, and cost effectively.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
Based on the 2024 Burros Fries Franchise Disclosure Document, franchisees are generally required to purchase or lease all products, supplies, kitchen equipment, and services from Burros Fries, its affiliates, or approved vendors. Franchisees are prohibited from purchasing or leasing from unapproved vendors without written approval from Burros Fries. Burros Fries has the right to add, modify, or change approved products, supplies, kitchen equipment, vendors, and suppliers.
Burros Fries considers factors such as price, quality, safety, and the vendor's financial strength when approving vendors or suppliers. Franchisees must use only approved products, supplies, kitchen equipment, vendors, suppliers, and services, including ingredients, beverage products, supplies, kitchen equipment, technology items, software, printed menus, signage, and uniforms.
While the FDD does not explicitly address whether a franchisee can act as an exclusive distributor for a third-party vendor, the strict requirements for using only approved vendors and the prohibition against using unapproved vendors without written consent suggest that such an arrangement would likely not be permitted unless specifically approved by Burros Fries. A prospective franchisee should seek clarification from Burros Fries regarding the possibility of acting as an exclusive distributor for a third-party vendor and under what conditions such an arrangement might be considered.