Can Casiola's affiliates be designated as the exclusive supplier for franchisees?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
- (5) Franchisor reserves the right to designate, from time to time, a single supplier and/or distributor for any services, products, equipment, supplies, or materials including, but not limited to, the System Supplies and Service Vehicles and to require Franchisee to use such a designated supplier exclusively, which exclusive designated supplier and/or distributor may be Franchisor and/or Franchisor's affiliates.
Franchisor and its affiliates may receive payments from suppliers and/or distributors on account of such supplier's or distributor's dealings with Franchisee and other franchisees of the System and that Franchisor may use all amounts so received without restriction and for any purpose, including Franchisor's profit;
- (6) If Franchisee proposes or requests that Franchisor consider the approval of products, services, equipment, supplies, suppliers and/or distributors for use in the Franchised Business where such products, services, equipment, supplies, suppliers and/or distributors are not, presently, at the time of Franchisee's request, approved for use in the System, Franchisee: (a) must provide Franchisor with a written request where Franchisee specifies the product, service, equipment, supply, supplier and/or distributor, the reason for Franchisee's request; (b) shall timely submit to Franchisor such information, reports, specifications, and samples as Franchisor, in Franchisor's Reasonable Business Judgment requests; and (c) shall pay to Franchisor a supplier evaluation fee per requested product, service, equipment, supply, supplier and/or distributor to be considered including, but not limited to, the supplier evaluation fees that Franchisor, in Franchisor's Reasonable Business Judgment, establishes and assesses based on, among other things, the administrative costs and time associated with evaluating, assessing and testing the proposed product, service, equipment, supply, supplier and/or distributor including, but not limited to Franchisor's internal employees and independent third parties engaged and/or retained by Franchisor for evaluation and testing.
The foregoing fees and payments shall be paid by Franchisee to Franchisor within 14 days of the date of Franchisor's invoice.
Source: Item 23 — RECEIPTS (FDD pages 47–209)
What This Means (2024 FDD)
According to Casiola's 2024 Franchise Disclosure Document, Casiola retains the right to designate a single exclusive supplier or distributor for various services, products, equipment, supplies, or materials, including System Supplies and Service Vehicles. This designated supplier can be Casiola itself or one of its affiliates.
This means that as a Casiola franchisee, you may be required to purchase certain items, including essential System Supplies and even vehicles, exclusively from a supplier chosen by Casiola. This supplier could be Casiola or one of its affiliated companies. Casiola also reserves the right to change the designated supplier or distributor at any time.
Casiola and its affiliates may receive payments from these designated suppliers based on the franchisee's purchases. Casiola is allowed to use these payments without any restrictions, including for their own profit. If a franchisee wants Casiola to consider approving a new supplier, product, or service not currently approved within the Casiola system, the franchisee must submit a written request, provide all necessary information and samples, and pay a supplier evaluation fee to Casiola. This fee covers the costs associated with evaluating and testing the proposed supplier or product, including administrative costs and fees for third-party evaluations.