What is the requirement for Chocolate Fish Coffee franchisees to pay all vendors and suppliers?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
rd parties, shall be honest and fair. Franchisee shall comply with any code of ethics or statement of values from Chocolate Fish Franchising. Franchisee shall not take any action which may injure the goodwill associated with the Marks.
ARTICLE 8. SUPPLIERS AND VENDORS
8.1 Generally. Franchisee shall acquire all Inputs required by Chocolate Fish Franchising from time to time in accordance with System Standards. Chocolate Fish Franchising may require Franchisee to purchase or lease any Inputs from Chocolate Fish Franchising, Chocolate Fish Franchising's designee, Required Vendors, Approved Vendors, and/or under Chocolate Fish Franchising's specifications. Chocolate Fish Franchising may change any such requirement or change the status of any vendor. To make such requirement or change effective, Chocolate Fish Franchising shall issue the appropriate System Standards.
- 8.2 Alternate Vendor Approval. If Chocolate Fish Franchising requires Franchisee to purchase a particular Input only from an Approved Vendor or Required Vendor, and Franchisee desires to purchase the Input from another vendor, then Franchisee must submit a written request for approval and any information, specifications and/or samples requested by Chocolate Fish Franchising. Chocolate Fish Franchising may condition its approval on such criteria as Chocolate Fish Franchising deems appropriate, which may include evaluations of the vendor's capacity, quality, financial stability, reputation, and reliability; inspections; product testing, and performance reviews. Chocolate Fish Franchising will provide Franchisee with written notification of the approval or disapproval of any proposed new vendor within 30 days after receipt of Franchisee's request.
- 8.3 Alternate Input Approval. If Chocolate Fish Franchising requires Franchisee to purchase a particular Input, and Franchisee desires to purchase an alternate to the Input, then Franchisee must submit a written request for approval and any 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.
Source: Item 23 — RECEIPTS (FDD pages 41–119)
What This Means (2024 FDD)
According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, franchisees must acquire all required inputs in accordance with the System Standards. Chocolate Fish Coffee may require franchisees to purchase or lease inputs from Chocolate Fish Coffee itself, its designee, Required Vendors, or Approved Vendors, and/or under Chocolate Fish Coffee's specifications. These requirements and vendor statuses are subject to change, with Chocolate Fish Coffee issuing System Standards to communicate such changes.
If a franchisee wishes to purchase a particular input from a vendor that is not an Approved Vendor or Required Vendor, they must submit a written request for approval, including any information, specifications, or samples requested by Chocolate Fish Coffee. Chocolate Fish Coffee may base its approval on criteria such as the vendor's capacity, quality, financial stability, reputation, and reliability, as well as inspections, product testing, and performance reviews. The franchisee will receive written notification of approval or disapproval within 30 days of their request.
Similarly, if a franchisee wants to purchase an alternative input to one that Chocolate Fish Coffee requires, they must submit a written request for approval, along with any necessary information, specifications, or samples. Chocolate Fish Coffee will provide written notification of approval or disapproval of the proposed alternate input within 30 days of receiving the franchisee's request. Chocolate Fish Coffee also retains the right to negotiate prices and terms with vendors on behalf of the entire Chocolate Fish Coffee system. This can be beneficial for franchisees as it leverages the collective buying power of the franchise network.
Chocolate Fish Coffee may receive rebates, payments, or other consideration from vendors related to franchisee purchases. Chocolate Fish Coffee has the option to collect payments from franchisees on behalf of vendors and remit those payments, potentially adding a markup for administering this payment program. They may also implement a centralized purchasing system or establish a purchasing cooperative that franchisees may be required to join. However, Chocolate Fish Coffee assumes no liability to the franchisee for any claims or losses related to products or services provided by Approved Vendors or Required Vendors, including issues like defects, delays, or unavailability.