What is the relationship between franchisee purchases and the rebates received by Carbones Pizzeria's affiliates?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
r 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, the company's affiliates may receive rebates from suppliers based on the purchases made by franchisees. These rebates can be structured in two ways: either as a flat amount per case purchased or as a percentage of the total amount the franchisee pays for the product. The specific rebate amount varies depending on the item purchased, ranging from $1 to $10 per case or 1% to 7% of the product cost.
During the fiscal year ending October 31, 2024, Carbones Pizzeria's affiliate received $159,266 in revenue from these rebates. This revenue is directly tied to the volume of purchases made by franchisees from approved suppliers. A portion of these rebates, specifically $30,000, was allocated to the Advertising Fund, suggesting that franchisee purchases indirectly contribute to advertising efforts.
This arrangement means that a portion of each franchisee's expenditure on supplies goes back to Carbones Pizzeria's affiliate in the form of rebates. While franchisees are required to purchase from approved suppliers to maintain product consistency, they should be aware that these purchases also generate revenue for the franchisor's affiliate. This revenue stream is not shared with individual franchisees but may contribute to overall system benefits like advertising. Prospective franchisees should consider this dynamic when evaluating the cost of goods and the overall financial relationship with Carbones Pizzeria.