For Chem-Dry, what are the specific uses for the rebates and other payments received from approved suppliers?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
ss services (such as credit card processing). Some approved suppliers provide us with rebates and other payments based on sales made to franchisees, but we use these payments to offset the costs of our franchisee convention and to support our supplier marketing program directed to franchisees. This amount is .26% of the supplier's gross sales to our franchisees.
No officer of CDI or its affiliates owns an interest in any approved supplier, however some of the BELFOR officers have an ownership interest in our affiliates BHI Distribution and Colman Wolf, which may, in the future, supply products and services to your Chem-Dry Business.
Approval of other suppliers
CDI may approve other suppliers of equipment, products, supply items or business services who meet CDI's specifications. CDI issues and modifies standards and specifications to franchisees by including them in the Manual (and revisions to the Manual) or otherwise in writing.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 31–33)
What This Means (2024 FDD)
According to Chem-Dry's 2024 Franchise Disclosure Document, Chem-Dry receives rebates and other payments from approved suppliers based on franchisee sales. These payments are specifically used to offset the costs of the franchisee convention and to support Chem-Dry's supplier marketing program directed to franchisees.
For the fiscal year ending December 31, 2023, Chem-Dry collected $74,859 in revenue from these rebates and other payments, which represented 0.24% of their total revenue of $31,071,624.00. The FDD specifies that this revenue was used to offset the costs of the franchisee convention and to support their supplier marketing program. This indicates that these funds are reinvested into activities that directly or indirectly benefit franchisees.
This arrangement is fairly common in franchising, where franchisors negotiate rebates or commissions with suppliers based on the collective purchasing power of the franchise network. These funds can be used in various ways, such as reducing franchise fees, providing training or support services, or funding marketing initiatives. For Chem-Dry, the focus is on the franchisee convention and supplier marketing, which suggests an emphasis on networking, education, and promoting approved suppliers to the franchisees.
Prospective franchisees should consider this arrangement as a potential benefit, as it can contribute to a stronger franchise system and potentially reduce costs associated with attending conventions or accessing marketing support. However, it's also important to evaluate whether the approved suppliers offer competitive pricing and quality, as franchisees are generally required to purchase from these sources.