Does Chocolate Bash require franchisees to purchase inventory from them?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
tes as Supplier
We are a supplier of some of the goods and inventory which you must purchase.
These are the items which will be purchased directly from us:
- 1- Pancake mix
- 2- Waffle mix
- 3- Crepe mix
- 4- Belgium chocolate ( milk-dark-white )
- 5- Pistachio spread
- 6- Karak tea
- 7- Turkish coffee
- 8- Uniforms for Staff
- 9 Specialty Dine In Plates
Ownership of Suppliers
Outside of your requirement to purchase some items directly from us or our Affiliates, None of our officers owns an interest in any supplier to our franchisees.
Alternative Suppliers
If you want to use a supplier that is not on our list of approved suppliers, you must request our approval in writing. We will grant or revoke approvals of suppliers based on criteria appropriate to the situation, which may include evaluations of the supplier's capacity, quality, financial stability, reputation, and reliability; inspections; product testing, and performance reviews. Our criteria for approving suppliers are not available to you. We permit you to contract with alternative suppliers who meet our criteria only if you request our approval in writing, and we grant approval. There is no fee for us to review or approve an alternate supplier. We will provide you with written notification of the approval or disapproval of any supplier you propose within 30 days after receipt of your request. We may grant approvals of new suppliers or revoke past approvals of suppliers on written notice to you, or by updating our Manual.
Issuing Specifications and Standards
We issue specifications and standards to you for applicable aspects of the franchise in our Manual and/or in written directives. We may issue new specifications and standards for any aspect of our brand system, or modify existing specifications and standards, at any time by revising our Manual and/or issuing new written directives (which may be communicated to you by any method we choose). We will generally (but are not obligated to) issue new or revised specifications only after thorough testing in our headquarters, in company-owned outlets, and/or a limited market test in multiple units.
Revenue to Us and Our Affiliates
We currently do derive revenue from the required purchases and leases by franchisees. We derived $10,387 and 5% of our total revenue from required purchases and leases.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 15–17)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, franchisees are required to purchase certain goods and inventory directly from Chocolate Bash. These items include pancake mix, waffle mix, crepe mix, Belgium chocolate (milk-dark-white), pistachio spread, Karak tea, Turkish coffee, staff uniforms, and specialty dine-in plates. For other inventory items not purchased directly from Chocolate Bash, franchisees must purchase them from approved suppliers.
Chocolate Bash has the right to mandate that franchisees purchase or lease all goods, services, supplies, fixtures, equipment, inventory, computer hardware and software, real estate, or comparable items related to establishing or operating their business either from Chocolate Bash or its designee, or from suppliers approved by Chocolate Bash, or according to Chocolate Bash's specifications. This gives Chocolate Bash significant control over the franchisee's supply chain and product quality.
The FDD also states that Chocolate Bash currently derives revenue from these required purchases and leases by franchisees. In the reported period, Chocolate Bash derived $10,387 and 5% of its total revenue from these required purchases and leases. The estimated required purchases and leases to establish the business account for 50% - 70% of the total purchases and leases to establish the business. Similarly, the required purchases and leases of goods and services to operate the business are estimated to be 50% to 60% of the total purchases and leases of goods and services to operate the business. This indicates a substantial portion of a franchisee's expenses will be directed to Chocolate Bash or its approved suppliers.
If a franchisee wishes to use a supplier not on Chocolate Bash's approved list, they must request written approval. Chocolate Bash will grant or revoke approvals based on criteria such as the supplier's capacity, quality, financial stability, reputation, and reliability, including inspections, product testing, and performance reviews. Chocolate Bash will provide written notification of approval or disapproval within 30 days after receiving the request. This process ensures that Chocolate Bash maintains control over the quality and consistency of products used in its franchises.