From whom must a C3 Wellness Spa franchise purchase its System Supplies?
C3_Wellness_Spa Franchise · 2024 FDDAnswer from 2024 FDD Document
IONS ON SOURCES OF PRODUCTS AND SERVICES**
You may only offer and sell services and products that we designate (the "Approved Spa Products and Services"). You may only use, lease, and/or install those products, services, furniture, fixtures, equipment, and other materials and supplies that we authorize and designate in writing that are now a part of our System or that we may designate as a part of our System in the future (the "System Supplies"). You must operate and/or manage the Spa Location Franchise in strict conformity with the Franchise Agreement and the methods, standards, specifications and sources of supply that we designate and prescribe in the Manuals.
Source Restricted Purchases and Leases - Generally
We require that you purchase or lease certain source restricted goods and services for the development and operation of your Spa Location Franchise. Source restricted goods and services are goods and services that must meet our specifications and/or must be purchased from an approved or designated supplier. We may designate a supplier, that may include us or our affiliates, as the exclusive supplier for the System. Our specifications and list of approved and designated suppliers is contained in our Manuals. We will notify you of any changes to our specifications or list of approved or designated suppliers. We may notify you of these changes in various ways, including written or electronic correspondence, amendments and updates to our Manuals, verbal and other forms of communication. We formulate and modify our standards and specifications for products and services based on our industry experience and our management decisions as to the overall operation and expansion of the System.
Suppliers and Supplier Criteria
We may designate ourselves and our affiliates as exclusive suppliers of source restricted goods and services. We may designate ourselves or a third party as the sole and exclusive supplier irrespective of the existence of competing suppliers. If there is no designated supplier for a particular item, you will purchase all products, supplies and services from suppliers who meet our specifications and standards. During the year ending December 31, 2023, we did not receive any revenue from approved suppliers based on our franchisees' purchases.
We or our affiliate may provide certain branded promotional materials, brochures, or business cards or may otherwise require you to purchase these materials from our designated suppliers. Except for these items, currently, we are not, and our affiliates are not approved suppliers of the source restricted goods and services identified below. No franchisor officer owns an interest in any supplier.
If you want to purchase or lease a source restricted item from a supplier that has not been previously approved or designated by us in writing, you must send us a written request for approval and submit additional information that we may request. We may charge you a fee equal to the costs and expenses that we incur in reviewing and/or evaluating an alternate supplier, product, and/or service requested by you. We may request that you send us samples from the supplier for testing and documentation from the supplier for evaluation. We may also require, subject to our discretion, that we be allowed to inspect the supplier's facilities. We will notify you of our approval or disapproval within a reasonable time, not to exceed 60 days after we receive your written request for approval and all additional information and samples that we may request. We may, in our discretion, withhold our approval. We do not make our procedures or criteria for approving suppliers available to our System franchisees, except that when evaluating the approval of a particular supplier, among other things, we consider: whether the supplier can demonstrate to our reasonable satisfaction the ability to meet our standards, specifications and production requirements, the suppliers quality control, whether or not we are the exclusive supplier of the particular item, whether or not our affiliate or affiliates are the exclusive supplier of the particular item, and whether or not the suppliers approval, in our sole determination, will allow us to advance the overall interests of the System.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 25–29)
What This Means (2024 FDD)
According to the 2024 C3 Wellness Spa Franchise Disclosure Document, franchisees are required to purchase System Supplies exclusively from C3 Wellness Spa, its affiliates, or its designated suppliers. System Supplies include items used to perform spa services and retail products sold to customers. Franchisees must purchase their Initial Supply Inventory and Initial Retail Inventory exclusively from C3 Wellness Spa, its affiliate, or an approved supplier.
C3 Wellness Spa may designate itself or its affiliates as exclusive suppliers for source-restricted goods and services, irrespective of competing suppliers. If there is no designated supplier for a particular item, franchisees must purchase from suppliers who meet C3 Wellness Spa's specifications and standards, as detailed in the manuals. C3 Wellness Spa will notify franchisees of any changes to the specifications or the list of approved or designated suppliers through various means, including written or electronic correspondence and updates to the manuals.
This requirement ensures uniformity and quality control across all C3 Wellness Spa locations. While franchisees have limited flexibility in sourcing System Supplies, they can request approval for alternative suppliers by submitting a written request and any additional information that C3 Wellness Spa may require. C3 Wellness Spa may charge a fee to review and evaluate the alternate supplier, and approval is subject to C3 Wellness Spa's discretion, considering factors such as the supplier's ability to meet standards and the overall interests of the C3 Wellness Spa system.
For other items such as unbranded furniture and fixtures, franchisees have more flexibility and may purchase from any supplier of their choosing, provided that the items meet C3 Wellness Spa's specifications and standards. However, initial service equipment, furniture, and branded fixtures must be purchased from C3 Wellness Spa or its affiliates. All materials bearing the Licensed Marks and branded marketing materials must be purchased from C3 Wellness Spa directly, its affiliates, or its designated exclusive supplier.