If a Carls franchisee proposes to purchase goods from a supplier not previously approved, what must the franchisee do?
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 wants to purchase goods or materials from a supplier not already approved by Carls (for items the franchisee isn't required to buy from Carls, its affiliates, or designated suppliers), the franchisee must submit a written request for approval. Alternatively, the franchisee can have the supplier submit the request.
Carls has the right to inspect the supplier's facilities and require the supplier to provide information, specifications, and samples for testing. This testing may be conducted by Carls or an independent, certified laboratory. The franchisee is responsible for covering the costs of these inspections and tests. A facility audit may also be necessary in addition to product testing. Carls will then notify the franchisee within 60 days whether the supplier is approved.
If Carls tentatively approves the supplier, the franchisee must submit a $1,500 deposit to cover inspection costs. The franchisee will be responsible for any additional inspection expenses. Approval may depend on factors like delivery frequency, reporting capabilities, service standards, and the number of suppliers already approved. Approvals can be temporary and subject to further evaluation. Carls may also require periodic re-testing and facility audits at the franchisee's expense to ensure ongoing compliance. Carls will provide written notice if any approvals are revoked.