What is the process for a Carls franchisee to use a delivery service provider that is not already approved?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
We must pre-approve all delivery service providers not already designated as approved under our delivery program. In addition, we must pre-approve all sales recording processes that originate from the delivery service providers.
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.
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, franchisees are required to use approved third-party delivery service providers, which currently include Uber Eats, Door Dash, and GrubHub. If a franchisee wants to use a delivery service provider that is not already approved by Carls, they must first obtain pre-approval from Carls. This requirement extends to the sales recording processes originating from these delivery services, which also need pre-approval.
To get a new supplier approved, either the franchisee or the supplier needs to submit a written request to Carls. As a condition of approval, Carls has the right to inspect the supplier's facilities and require the submission of information, specifications, and samples for testing, potentially by an independent, certified laboratory. The franchisee is responsible for covering the costs associated with the inspection and testing. Specifically, the franchisee must submit a $1,500 deposit to cover the initial inspection costs. Additional costs may arise during the inspection process, for which the franchisee will also be responsible.
Carls will then notify the franchisee within 60 days whether the supplier is approved. Approval may depend on factors such as delivery frequency, reporting capabilities, service standards (including responsiveness to complaints), sanitation standards, facility standards, insurance, and other quality assurance requirements. Carls may also consider the number of suppliers already approved. Approvals can be temporary, pending further evaluation. Carls may periodically require repeat testing and facility audits at the franchisee's expense to ensure ongoing compliance. Carls will provide written notice if any approvals are revoked.
This process ensures that all suppliers meet Carls's standards for quality, service, and operational consistency, but it also places the burden of cost and administrative effort on the franchisee to get a new supplier approved. Franchisees should factor in these potential costs and time delays when considering using a non-approved delivery service provider.