Can Carbones Pizzeria's affiliates receive rebates from suppliers based on franchisee purchases?
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 may receive rebates from suppliers based on franchisee purchases. These rebates can be either a flat amount or a percentage of the franchisee's purchases. The rebates currently 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, again depending on the specific product.
For a prospective Carbones Pizzeria franchisee, this means that a portion of their payments to approved suppliers could be returned to Carbones Pizzeria or its affiliates as a rebate. During the fiscal year ended October 31, 2024, Carbones Pizzeria's affiliate received $159,266 in revenue from these rebates. Of this amount, $30,000 was contributed to the Advertising Fund.
This arrangement is fairly common in franchising, where franchisors negotiate with suppliers and receive rebates or other incentives based on the collective purchasing power of their franchisees. While the FDD indicates that a portion of the rebates was allocated to the Advertising Fund, it's important for potential franchisees to understand how the remaining rebate revenue is used by Carbones Pizzeria and its affiliates. Understanding the flow of these funds can help franchisees assess the overall value and transparency of the franchise system.