If Chocolate Fish Coffee implements a centralized purchasing system, what impact does this have on the franchisee?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
information, specifications and/or samples requested by Chocolate Fish Franchising. Chocolate Fish Franchising will provide Franchisee with written notification of the approval or disapproval of any proposed alternate Input within 30 days after receipt of Franchisee's request.
- 8.4 Purchasing. Chocolate Fish Franchising may negotiate prices and terms with vendors on behalf of the System. Chocolate Fish Franchising may receive rebates, payments or other consideration from vendors in connection with purchases by franchisees. Chocolate Fish Franchising has the right (but not the obligation) to collect payments from Franchisee on behalf of a vendor and remit the payments to the vendor and to impose a reasonable markup or charge for administering the payment program. Chocolate Fish Franchising may implement a centralized purchasing system. Chocolate Fish Franchising may establish a purchasing cooperative and require Franchisee to join and participate in the purchasing cooperative on such terms and conditions as Chocolate Fish Franchising may determine.
- 8.5 No Liability of Franchisor. Chocolate Fish Franchising shall not have any liability to Franchisee for any claim or loss related to any product provided or service performed by any Approved Vendor or Required Vendor, including without limitation defects, delays, or unavailability of products or services.
- 8.6 Product Recalls. If Chocolate Fish Franchising or any vendor, supplier, or manufacturer of an item used or sold in Franchisee's Business issues a recall of such item or otherwise notifies Franchisee that such item is defective or dangerous, Franchisee shall immediately cease using or selling such item, and Franchisee shall at its own expense comply with all instructions from Chocolate Fish Franchising or the vendor, supplier, or manufacturer of such item with respect to such item, including without limitation the recall, repair, and/or replacement of such item.
ARTICLE 9. MARKETING
9.1 Approval and Implementation. Franchisee shall not conduct any marketing, advertising, or public relations activities (including in-store marketing materials, websites, online advertising, social media marketing or presence, and sponsorships) that have not been approved by Chocolate Fish Franchising.
Source: Item 23 — RECEIPTS (FDD pages 41–119)
What This Means (2024 FDD)
According to the 2024 Chocolate Fish Coffee Franchise Disclosure Document, Chocolate Fish Coffee has the right to implement a centralized purchasing system. This means that Chocolate Fish Coffee may establish a system where franchisees are required to purchase goods and services through a centralized entity, potentially a purchasing cooperative. Franchisees may be required to join and participate in this cooperative under terms and conditions set by Chocolate Fish Coffee.
Chocolate Fish Coffee may negotiate prices and terms with vendors on behalf of the entire Chocolate Fish Coffee system. This could potentially lead to cost savings for franchisees through bulk purchasing and negotiated discounts. Chocolate Fish Coffee may also receive rebates, payments, or other consideration from vendors based on franchisee purchases. Furthermore, Chocolate Fish Coffee has the right to collect payments from franchisees on behalf of vendors, remit those payments, and impose a reasonable markup or charge for administering this payment program.
However, Chocolate Fish Coffee states it will not have any liability to the franchisee for any claim or loss related to any product provided or service performed by any Approved Vendor or Required Vendor, including without limitation defects, delays, or unavailability of products or services. If a product recall occurs, the franchisee is responsible for complying with instructions from Chocolate Fish Coffee or the vendor, including ceasing use or sale of the item and handling the recall, repair, or replacement at their own expense. Franchisees must acquire all required inputs in accordance with Chocolate Fish Coffee's System Standards, and Chocolate Fish Coffee can mandate purchases or leases from specific vendors or under specific specifications, changing these requirements as needed by issuing updated System Standards.