For Chop5 Salad Kitchen, how will franchisees be notified of changes to specifications and suppliers for source-restricted goods and services?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer from 2024 FDD Document
Source-Restricted Purchases and Leases - Generally
You must purchase or lease certain "source-restricted" goods and services for the development and operation of your Restaurant. By "source-restricted", we mean the good or service must meet our specifications and/or must be purchased from an approved or designated supplier (in some cases, an exclusive designated supplier, which may be us or an affiliate). The Manual includes our specifications and supplier list. We notify you of changes to our specifications and suppliers by email, updates to the Manual or other means of communication.
Supplier Criteria
Our criteria for evaluating a supplier include standards for quality, delivery, performance, design, appearance and price of the product or service as well as the dependability, reputation and financial viability of the supplier. Upon request, we will provide you with any objective specifications pertaining to our evaluation of a supplier or product, although certain important subjective criteria (e.g., product appearance, taste, design, functionality, etc.) are important to our evaluation but cannot be described in writing.
If you wish to purchase or lease a source-restricted item from a non-approved supplier, you must send us a written request for approval and submit all additional information we request. We may require that you send us samples from the supplier for testing. We may also require that we be allowed to inspect the supplier's facility.
We will use best efforts to notify you of our decision within 45 days after we receive your request for approval and all additional information and samples we require. If we fail to issue our written approval within the 45-day period, we are deemed to have disapproved the proposed supplier. We may periodically re-inspect the facilities and products of an approved supplier and revoke our approval if the supplier fails to meet our then-current criteria. You must reimburse us for all costs we incur to review products and suppliers you propose.
Current Source-Restricted Items
We estimate nearly 70% to 95% of the total purchases and leases to establish your Restaurant and 35% to 60% of ongoing operating expenses will consist of source-restricted goods or services, as further described below.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 20–23)
What This Means (2024 FDD)
According to Chop5 Salad Kitchen's 2024 Franchise Disclosure Document, franchisees will be notified of changes to specifications and suppliers for source-restricted goods and services via email, updates to the Manual, or other means of communication. Source-restricted goods and services are those that must meet Chop5 Salad Kitchen's specifications and/or be purchased from an approved or designated supplier.
This is a fairly standard practice in franchising, as franchisors need to maintain consistency across all locations to protect the brand. The Manual includes Chop5 Salad Kitchen's specifications and supplier list. The franchisor's criteria for evaluating a supplier include standards for quality, delivery, performance, design, appearance, and price, as well as the dependability, reputation, and financial viability of the supplier.
If a franchisee wishes to purchase or lease a source-restricted item from a non-approved supplier, they must send a written request for approval to Chop5 Salad Kitchen and submit any additional information requested. Chop5 Salad Kitchen may require samples for testing and may also require an inspection of the supplier's facility. Chop5 Salad Kitchen will use best efforts to notify the franchisee of their decision within 45 days after receiving the request and all required information and samples. If written approval is not issued within the 45-day period, the proposed supplier is deemed disapproved. Chop5 Salad Kitchen may periodically re-inspect approved suppliers and revoke approval if they fail to meet current criteria. The franchisee must reimburse Chop5 Salad Kitchen for all costs incurred to review proposed products and suppliers.
Nearly 70% to 95% of the total purchases and leases to establish a Chop5 Salad Kitchen Restaurant and 35% to 60% of ongoing operating expenses will consist of source-restricted goods or services. This means that a significant portion of a franchisee's expenses will be dictated by Chop5 Salad Kitchen's approved suppliers, so it's important to understand these requirements and potential costs upfront.