Does Chocolate Fish Coffee specify the equipment and supplies that franchisees must purchase?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
[Item 8: RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES]
E. Equipment and Supplies. You must purchase specific equipment and supplies from us directly. You will also purchase equipment and supplies from our approved vendors and suppliers according to our standards and specifications.
Us or our Affiliates as Supplier
We are currently a supplier of the coffee products and select equipment and supplies you must purchase. We reserve the right to be a supplier (or the sole supplier) of a good or service in the future.
Ownership of Suppliers
Outside of your requirement to purchase coffee inventory and some of your operating equipment and supplies from us directly, 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
[Item 8: RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES]
E. Equipment and Supplies. You must purchase specific equipment and supplies from us directly. You will also purchase equipment and supplies from our approved vendors and suppliers according to our standards and specifications.
[Item 8: RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES]
Specific Obligations
The following are our current specific obligations for purchases and leases:
- C. Point-of-sale software and hardware, and related software and hardware. You must purchase (or lease) the point-of-sale software and hardware, and related software and hardware, that we specify. See Item 11 for more details.
[Item 8: RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES]
Revenue to Us and Our Affiliates
We will derive revenue from the required purchases and leases by franchisees. Because we are a new franchisor, our total revenue in 2023 was $0. Our revenue from all required purchases and leases of products and services by franchisees in the prior fiscal year was $0. The percentage of our total revenues that were from required purchases or leases in the prior fiscal year was 0%.
Proportion of Required Purchases and Leases
We estimate that the required purchases and leases to establish your business are 50% to 80% of your total purchases and leases to establish your business.
We estimate that the required purchases and leases of goods and services to operate your business are 50% to 80% of your total purchases and leases of goods and services to operate your business.
Payments by Designated Suppliers to Us
We do not currently receive payments from any designated suppliers based on purchases by you or other franchisees. However, the franchise agreement does not prohibit us from doing so.
Negotiated Arrangements
We do negotiate purchase arrangements with suppliers, including price terms, for the benefit of franchisees. However, we may do so in the future.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 16–18)
What This Means (2024 FDD)
According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, franchisees are required to purchase specific equipment and supplies directly from Chocolate Fish Coffee, as well as from approved vendors and suppliers, adhering to the franchisor's standards and specifications. This mandate ensures uniformity and quality control across all Chocolate Fish Coffee locations. Franchisees must also purchase the point-of-sale software and hardware that Chocolate Fish Coffee specifies.
Chocolate Fish Coffee retains the right to be the supplier, or the sole supplier, of goods and services in the future. While franchisees are required to purchase coffee inventory and some operating equipment and supplies directly from Chocolate Fish Coffee, none of the company's officers currently hold an interest in any other supplier to franchisees. If a franchisee wishes to use an alternative supplier not already on the approved list, they must seek written approval from Chocolate Fish Coffee.
Chocolate Fish Coffee will evaluate the proposed supplier based on criteria such as capacity, quality, financial stability, reputation, and reliability, and will notify the franchisee of the approval or disapproval within 30 days of the request. Approvals of new suppliers or revocations of past approvals can be issued via written notice or updates to the Brand Standards Manual. Chocolate Fish Coffee issues specifications and standards for the franchise in its Brand Standards Manual and written directives, and may modify these at any time after testing in company-owned outlets or limited market tests.
Chocolate Fish Coffee estimates that required purchases and leases to establish the business account for 50% to 80% of the total establishment costs. Similarly, ongoing operations are estimated to require 50% to 80% of total purchases and leases to be from designated or approved sources. While Chocolate Fish Coffee does not currently receive payments from designated suppliers, the franchise agreement does not prohibit them from doing so in the future, and they do negotiate purchase arrangements with suppliers for the benefit of franchisees.