Is there a fee for C3 Wellness Spa to evaluate a proposed new supplier from a franchisee?
C3_Wellness_Spa Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisor and its affiliates may receive payments from suppliers and/or distributors on account of such supplier's or distributor's dealings with Franchisee and other franchisees and may use all amounts so received without restriction and for any purpose Franchisor and its affiliates deem appropriate.
- (7) If Franchisee proposes or requests that Franchisor consider the approval of products, services, equipment, supplies, suppliers and/or distributors for use in the Franchised Business where such products, services, equipment, supplies, suppliers and/or distributors are not presently, at the time of Franchisee's request, approved for use in the System: (a) Franchisee must provide Franchisor with a written request where Franchisee specifies the product, service, equipment, supply, supplier and/or distributor, the reason for Franchisee's request; (b) shall timely submit to Franchisor such information, reports, specifications, and samples as Franchisor, in Franchisor's Reasonable Business Judgment requests; and (c) shall pay to Franchisor a Supplier Evaluation Fee per requested product, service, equipment, supply, supplier and/or distributor to be considered including, but not limited to, the Supplier Evaluation Fees that Franchisor, in Franchisors Reasonable Business Judgment, establishes and assesses based on, among other things, the administrative costs and time associated with evaluating, assessing and testing the proposed product, service, equipment, supply, supplier and/or distributor including, but not limited to Franchisor's internal employees and independent third parties engaged and/or retained by Franchisor for evaluation and testing.
The foregoing fees and payments shall be paid by Franchisee to Franchisor within 14 days of the date of Franchisor's invoice.
Upon Franchisee's compliance with the foregoing, within 60 days of the completion of all inspections and evaluations, Franchisor shall notify Franchisee of Franchisor's approval or disapproval which shall be determined by Franchisor in Franchisor's Reasonable Business Judgment.
Under no circumstance shall the foregoing be construed as implying that Franchisor is required to approve alternative suppliers and Franchisor shall exclusively determine, in Franchisor's Reasonable Business Judgment, the level of evaluation to be conducted by Franchisor.
Source: Item 23 — RECEIPTS (FDD pages 59–293)
What This Means (2024 FDD)
According to C3 Wellness Spa's 2024 Franchise Disclosure Document, a franchisee may incur a Supplier Evaluation Fee if they propose a new supplier that is not already approved within the C3 Wellness Spa system. To request consideration of a new supplier, product, service, equipment, or supply, the franchisee must submit a written request detailing the reason for the request and provide any information, reports, specifications, and samples that C3 Wellness Spa deems necessary.
In addition to providing the required documentation, the franchisee is responsible for paying a Supplier Evaluation Fee for each requested item or supplier. The amount of this fee is determined by C3 Wellness Spa based on the administrative costs and time associated with the evaluation, assessment, and testing of the proposed supplier, product, service, equipment, or supply. This includes the costs of internal employees and any independent third parties engaged by C3 Wellness Spa for the evaluation and testing process.
The franchisee must pay these fees within 14 days of the date of C3 Wellness Spa's invoice. C3 Wellness Spa will then notify the franchisee of its approval or disapproval within 60 days of completing all inspections and evaluations. However, the document explicitly states that C3 Wellness Spa is not required to approve alternative suppliers and has the sole discretion to determine the level of evaluation to be conducted.
This policy ensures that C3 Wellness Spa maintains control over the quality and consistency of products and services offered under its brand. For a prospective franchisee, this means they should be prepared to pay a fee if they wish to use a supplier not already approved by C3 Wellness Spa, and there is no guarantee that their proposed supplier will be approved.