Can Casiola designate a single supplier for system supplies?
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 supplier or distributor for services, products, equipment, supplies, or materials, including System Supplies. This designated supplier may be Casiola itself or its affiliates.
This means that as a franchisee, you may be required to purchase certain items, such as equipment and supplies, exclusively from a supplier chosen by Casiola. Casiola and its affiliates may receive payments from these designated suppliers based on the franchisee's purchases. These payments can be used by Casiola without restriction, including for profit.
If a franchisee wishes to use a product, service, or supplier not already approved by Casiola, the franchisee must submit a written request to Casiola. The franchisee is responsible for providing all necessary information, reports, specifications, and samples requested by Casiola. Additionally, the franchisee must pay a supplier evaluation fee to Casiola to cover the costs of evaluating the proposed product, service, equipment, supply, or distributor. This fee covers administrative costs, time spent on evaluation, and any third-party experts engaged by Casiola for testing and assessment. The franchisee must pay these fees within 14 days of the invoice date.
This policy is fairly common in franchising, as it allows the franchisor to maintain quality control and consistency across all franchise locations. However, it also limits the franchisee's ability to shop around for the best prices and potentially increases their operating costs. Prospective franchisees should inquire about the typical range of supplier evaluation fees and the criteria used to evaluate potential suppliers.