If Cilantro Taco Grill receives rebates or discounts from suppliers in the future, who keeps them?
Cilantro_Taco_Grill Franchise · 2024 FDDAnswer from 2024 FDD Document
ur Franchised Business.
Currently we have a relationship with an approved provider of HR and online payroll services, where we will receive a rebate and you will receive a discount if you use this provider. We also receive a rebate from our approved supplier of certain food and beverage items. We currently do not receive any other revenue, rebates, discounts or other material consideration from any other suppliers based on your required purchases of products, supplies or equipment; however, we may do so in the future, and any rebates or discounts we receive may be kept by us in our sole discretion.
We estimate that your purchase or lease of products, supplies and services from approved suppliers (or those which meet our specifications) will represent approximately 70 - 80% of your costs to establish your Franchised Business and approximately 30 - 40% of your costs for ongoing operation.
Currently, there are no purchasing or distribution cooperatives. However, we can require that you make your purchases through a cooperative if one is formed.
From time to time, we may negotiate purchase arrangements, including price terms, with designated and approved suppliers on behalf of all franchisees. As of the date of this Disclosure Document, we have not created any purchasing arrangements with suppliers.
We have the right to collect and retain any and all allowances, rebates, credits, incentives, or benefits (collectively, "Allowances") offered by manufacturers, suppliers, and distributors to you, to us, or to our affiliate, based upon your purchases of products (including proprietary products) and services from manufacturers, suppliers, and distributors.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 22–24)
What This Means (2024 FDD)
According to Cilantro Taco Grill's 2024 Franchise Disclosure Document, Cilantro Taco Grill may receive rebates or discounts from suppliers in the future, and it retains the discretion to keep them. Specifically, Cilantro Taco Grill currently receives a rebate from an approved supplier of certain food and beverage items and from an approved provider of HR and online payroll services.
Cilantro Taco Grill also has the right to collect and retain any and all allowances, rebates, credits, incentives, or benefits offered by manufacturers, suppliers, and distributors based upon a franchisee's purchases of products and services. Cilantro Taco Grill or its affiliates have all right, title, and interest in and to any and all of these Allowances and may collect and retain any or all of these Allowances without restriction, unless otherwise instructed by the manufacturer, supplier, or distributor.
This arrangement is fairly common in franchising, where franchisors negotiate with suppliers on behalf of the entire system. These negotiated savings or rebates can be a source of revenue for the franchisor. However, it's important for a prospective Cilantro Taco Grill franchisee to understand that these potential rebates kept by Cilantro Taco Grill do not reduce their obligation to pay into the Worldwide Creative Marketing Fund, if applicable.
During the fiscal year ended December 31, 2023, Cilantro Taco Grill and its affiliate did not earn any Allowances because they did not have any franchisees. As the franchise system grows, this could become a more significant factor in the relationship between Cilantro Taco Grill and its franchisees.