What is the maximum fee a Carls franchisee may have to pay for the inspection and testing of a proposed new supplier?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
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 already approved) and may be temporary pending further evaluation of such supplier. We may periodically require that the testing and/or facility audit be performed again at your expense to ensure continued compliance with our specifications and facility standards. We will advise you in writing if we revoke any approvals.
A fee not to exceed our actual costs of reviewing the supplier or distributor and auditing the facility, if needed, may be charged by us and must be paid by you.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 36–40)
What This Means (2024 FDD)
According to the 2024 FDD, Carls franchisees may incur costs when proposing a new supplier that isn't already approved by Carls. If a franchisee wants to purchase goods from a non-approved supplier, they must request approval from Carls.
Carls has the right to inspect the supplier's facilities and require testing by an independent, certified laboratory. The franchisee is responsible for covering the reasonable cost of the inspection and the actual cost of the testing. In the event Carls tentatively approves a request for an alternative supplier, the franchisee must submit a check for $1,500 as a deposit against the cost Carls incurs in inspecting the supplier's facility. The franchisee will be responsible for additional costs and expenses associated with the inspection of the facility, which must occur before final approval.
Carls may also periodically require that the testing and/or facility audit be performed again at the franchisee's expense to ensure continued compliance with their specifications and facility standards. A fee not to exceed Carls' actual costs of reviewing the supplier or distributor and auditing the facility, if needed, may be charged to the franchisee.