What deposit must a Carls franchisee submit if Carls tentatively approves a request for an alternative supplier?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
our approved suppliers which are publicly traded companies or through investment funds.
We may receive fees, commissions, field-of-use license royalties, or other consideration from approved suppliers based on sales to franchisees, and we may charge non-approved suppliers reasonable testing and/or inspection fees.
If you propose to purchase any goods or materials (that you are not required to purchase from CJR, an affiliate of CJR or a designated supplier) from a supplier that we have not previously approved, you must submit to us a written request for such approval, or you must request that the supplier do so. We have the right to require, as a condition of approval, that our representatives be permitted to inspect the supplier's facilities and that such information, specifications and samples as we reasonably designate be delivered to us and/or to an independent, certified laboratory designated by us for testing prior to granting approval. You must pay a fee not to exceed the reasonable cost of the inspection and the actual cost of the test. In addition to product testing, a facility audit may be required. We will notify you within 60 days as to whether you are authorized to purchase such products from that supplier. In the event we tentatively approve a request for an alternative supplier, you must submit a check for $1,500 to us as a deposit against the cost we incur in inspecting the supplier's facility. You will be responsible for additional costs and expenses associated with the inspection of the facility, which must occur before final approval. Approval of a supplier also may be subject to the frequency of delivery, reporting capabilities, standards of service (including prompt attention to complaints) or other criteria (including the number of suppliers alrea
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 36–40)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, if a franchisee seeks approval for an alternative supplier and Carls tentatively approves the request, the franchisee must submit a $1,500 check as a deposit. This deposit is to cover the costs Carls incurs while inspecting the supplier's facility. The franchisee is also responsible for any additional costs associated with the facility inspection, which must occur before final approval is granted.
This process ensures that all suppliers meet Carls's standards, even if they are not the initially approved vendors. The inspection of the supplier's facility is a critical step in maintaining the quality and consistency of products used in Carls restaurants. The franchisee bears the financial responsibility for these inspections, which can include not only the initial deposit but also any further expenses incurred during the inspection process.
Approval of an alternative supplier is not guaranteed even after the inspection. Carls may consider factors such as delivery frequency, reporting capabilities, service standards, and the number of existing approved suppliers. Furthermore, Carls retains the right to require periodic re-testing and facility audits at the franchisee's expense to ensure ongoing compliance with Carls's standards. This ongoing monitoring helps Carls maintain quality control and protect its brand reputation.
Ultimately, while franchisees have the option to seek alternative suppliers, they must be prepared to cover the costs associated with the approval process and meet Carls's stringent requirements. This policy ensures that any deviation from the standard supply chain does not compromise the quality and consistency of the Carls brand.