What constitutes a material breach of the Card My Yard franchise agreement related to sourcing?
Card_My_Yard Franchise · 2025 FDDAnswer from 2025 FDD Document
of this Agreement that a majority of the Card My Yard businesses then operated by us or our Affiliates have made or are utilizing best efforts to make such improvements.
E. Sourcing.
- (1) You agree to comply with all of our standards and specifications for the purchase of all inventory, supplies, materials, fixtures, furnishings, equipment, Computer Systems, and other products used or offered for sale at the Card My Yard business. If we have approved or designated suppliers (which may include us or our Affiliates or third party manufacturers, distributors and other sources) for any such item, you agree to obtain these items from those suppliers. Our approved or designated suppliers are those who demonstrate on a continuing basis the ability to meet our standards and specifications; who have adequate quality controls and the capacity to supply the needs of the Card My Yard business franchise network promptly and reliably over an extended period of time; and who have been approved in writing by us and who have not thereafter been disapproved by us. We may designate ourselves, our Affiliates or a third party as an approved or designated supplier, or as the sole approved or designated supplier of any item. You agree that we and our Affiliates may derive revenue based on your purchases and leases (including, without limitation, from charging you for products and services we or our Affiliates provide to you and from payments made to us or our Affiliates by suppliers that we designate or approve for some or all of our franchisees). We currently require you to purchase yard letters/signs (or related materials and equipment) totaling at least $500 each year from us.
- (2) If you wish to use any item or service that we have not yet evaluated or (for items that we require you to purchase from designated or approved suppliers) if you wish to purchase or lease any such item from a supplier that we have not yet approved, you must sub
Source: Item 23 — RECEIPTS (FDD pages 84–259)
What This Means (2025 FDD)
According to Card My Yard's 2025 Franchise Disclosure Document, failing to comply with sourcing requirements constitutes a material breach of the franchise agreement. Specifically, a franchisee must adhere to Card My Yard's standards and specifications when purchasing inventory, supplies, materials, fixtures, furnishings, equipment, computer systems, and other products used in the business.
A key aspect of this compliance is purchasing from approved or designated suppliers, which may include Card My Yard itself, its affiliates, or third-party sources. These suppliers are chosen based on their ability to consistently meet Card My Yard's standards, maintain quality control, and reliably supply the franchise network. Card My Yard can designate itself, its affiliates, or a third party as the sole approved supplier for any item, and the franchisee is obligated to make purchases accordingly. The FDD specifies that Card My Yard currently requires franchisees to purchase yard letters/signs (or related materials and equipment) totaling at least $500 each year from them.
If a franchisee wishes to use an item or purchase from a supplier not yet approved by Card My Yard, they must submit a written request for approval. Purchasing or leasing such items without prior written approval from Card My Yard is prohibited. Failure to comply with these sourcing requirements constitutes a material event of default under the agreement, potentially leading to termination of the franchise agreement.