Who must execute a confidentiality agreement when a Chicken Guy franchisee proposes a new supplier?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
If you propose to purchase any goods or materials (that you are not required to purchase from us, our affiliates or designated suppliers) 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 will provide our standards and specifications to you or to the proposed supplier, subject to the supplier's execution of a confidentiality agreement in a form acceptable to us. 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. In addition to product testing, a facility audit may be required. 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 shall be paid by you. We will notify you within 60 days after receipt of your request as to whether you are authorized to purchase such products from that supplier, and if such authorization is granted, you may contract with the approved supplier. We may periodically require that the testing be performed again at your expense to ensure continued compliance with our specifications.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 20–22)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, if a franchisee wants to purchase goods from a supplier not already approved by Chicken Guy, either the franchisee or the proposed supplier must submit a written request for approval. Before Chicken Guy provides its standards and specifications to the potential new supplier, the supplier must execute a confidentiality agreement that is acceptable to Chicken Guy.
This requirement protects Chicken Guy's proprietary information and trade secrets. By having the supplier sign a confidentiality agreement, Chicken Guy ensures that its standards and specifications for goods and materials will not be disclosed to unauthorized parties. This is a common practice in franchising, as franchisors need to maintain consistency and quality across all locations while protecting their brand standards.
The franchisee bears the responsibility of initiating the supplier approval process and ensuring that the proposed supplier is willing to sign the confidentiality agreement. This process is essential for franchisees who want to source goods from alternative suppliers, potentially to reduce costs or improve product quality, while still adhering to Chicken Guy's standards.
It is important for prospective Chicken Guy franchisees to understand this process and factor in the time and potential costs associated with getting a new supplier approved. The franchisee may also be responsible for covering the costs of facility inspections and product testing, in addition to ensuring the supplier signs the required confidentiality agreement.