Can Carbones Pizzeria or its affiliates derive revenue from franchisee purchases from approved suppliers?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
ve a single supplier or item.
We have the right to designate a single source or sources from whom you must purchase any required products and services, and we and/or our affiliates may be that single source or one or more of the sources. We and our affiliates may derive revenue from your purchases or leases of goods, services, supplies, fixtures, equipment, inventory, products and other items from our suppliers. We and our affiliates may receive rebates from various suppliers based upon franchisee purchases from the suppliers. These rebates may be based on a flat amount or percentage of franchisee purchases. Currently, these rebates range from $1 to $10 per case purchased depending upon the item purchased to 1-7% of the amount paid by the franchisee for the product, depending on the product. Our affiliate also receives a flat amount from one supplier to our franchise system. During our fiscal year ended October 31, 2024, our affiliate received $159,266 in revenue from rebates paid to it based on franchisee purchases, of which $30,000 was contributed to our Advertising Fund. This information is taken from our affiliate's
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 12–13)
What This Means (2025 FDD)
According to Carbones Pizzeria's 2025 Franchise Disclosure Document, Carbones Pizzeria and its affiliates can derive revenue from franchisee purchases or leases of goods, services, supplies, fixtures, equipment, inventory, products, and other items from approved suppliers. Carbones Pizzeria and its affiliates may also receive rebates from various suppliers based upon franchisee purchases. These rebates may be a flat amount or a percentage of franchisee purchases. Currently, these rebates range from $1 to $10 per case purchased, depending on the item, or from 1% to 7% of the amount paid by the franchisee for the product, depending on the product.
An affiliate of Carbones Pizzeria also receives a flat amount from one supplier to the franchise system. During the fiscal year ended October 31, 2024, the affiliate received $159,266 in revenue from rebates paid based on franchisee purchases, and $30,000 of this amount was contributed to the Advertising Fund. This information is based on the affiliate's internal financial statements.
This arrangement means that a portion of a franchisee's payments to suppliers goes back to Carbones Pizzeria or its affiliates. While this is a potential revenue stream for the franchisor, it also means that the franchisee may not always be getting the absolute lowest price on supplies, as the approved suppliers may factor in the rebate when setting their prices. However, Carbones Pizzeria does attempt to negotiate purchase arrangements with suppliers for the benefit of its franchisees. Franchisees are required to purchase a significant portion of their supplies from approved sources, with initial purchases to meet specifications representing over approximately 90% of total purchases to begin operations and between 70-90% of total expenses once operating.