What is the potential financial benefit to Carbones Pizzeria and its affiliates from franchisee purchases through 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 may gain revenue from franchisee purchases or leases of goods, services, supplies, and other items from approved suppliers. This revenue can come in the form of direct payments or rebates from these suppliers, based on franchisee purchasing volume. These rebates may be a flat amount or a percentage of the franchisee's 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.
For a prospective Carbones Pizzeria franchisee, this means that a portion of their payments to approved suppliers could indirectly benefit Carbones Pizzeria and its affiliates. While this is a common practice in franchising, it's important for franchisees to understand how these arrangements work. The FDD indicates that during the fiscal year ended October 31, 2024, Carbones Pizzeria's affiliate received $159,266 in revenue from rebates paid based on franchisee purchases. Of this amount, $30,000 was contributed to the Advertising Fund.
This arrangement creates a potential incentive for Carbones Pizzeria to negotiate favorable terms with suppliers, as increased franchisee purchases lead to higher rebates. However, it also raises the question of whether these supplier arrangements always result in the lowest possible prices for franchisees. Franchisees should evaluate whether the mandatory suppliers offer competitive pricing and quality compared to alternative options. It's also worth noting that Carbones Pizzeria states they do not provide material benefits to franchisees based on their purchase of particular products or services or use of any particular suppliers.
Prospective franchisees should inquire about the specific criteria Carbones Pizzeria uses to select and approve suppliers, as well as how these arrangements benefit the franchisees themselves. Understanding the details of these supplier relationships is crucial for assessing the overall cost of operating a Carbones Pizzeria franchise and ensuring that the arrangements are fair and transparent.