Can Cinch I.T. change the approved and required suppliers for my franchise?

According to Cinch I.T.'s 2024 Franchise Disclosure Document, Cinch I.T. has the authority to modify the list of approved and required suppliers for franchisees. The FDD states that franchisees are required to purchase hardware and software from suppliers designated, recommended, or approved by Cinch I.T., which may include Cinch I.T. and its affiliates. Cinch I.T. explicitly states that it may change approved and required suppliers from time to time. Cinch I.T. will communicate these changes to franchisees through updates to the Operations Manual or other forms of communication.

This means that a Cinch I.T. franchisee may be required to switch suppliers during the term of their franchise agreement. This could impact the franchisee's costs, as new suppliers may have different pricing structures. It could also affect the franchisee's operations if they need to adapt to new products or services from the new suppliers. The FDD also indicates that Cinch I.T. formulates and modifies specifications and standards imposed upon franchisees by evaluating the market acceptance of products and the financial stability of suppliers. However, these specifications and standards do not have to be issued to franchisees or approved suppliers, and the criteria for supplier approval are not made available to franchisees.

Cinch I.T. also has the right to designate itself or its affiliates as approved suppliers for any products and services, and even as the sole supplier of certain items. In such cases, franchisees would be obligated to purchase those items directly from Cinch I.T. or its affiliates at their current prices. This gives Cinch I.T. significant control over the supply chain and the franchisee's purchasing decisions. The FDD estimates that approximately 90% to 100% of a franchisee's ongoing expenditures will be for goods and services purchased from Cinch I.T., its affiliates, a designated supplier, or in accordance with Cinch I.T.'s standards and specifications.

If a franchisee wishes to use a supplier that is not pre-approved, they must submit written information about the proposed supplier to Cinch I.T. for approval. Cinch I.T. may also request product samples and inspect the supplier's facilities at the franchisee's expense. Cinch I.T. charges a fee for evaluating alternative suppliers, with the franchisee paying the greater of $500 or the actual cost of the review and/or inspection, including laboratory, professional, and travel expenses. If Cinch I.T. does not respond within 30 days of receiving the information or product samples, the request is deemed rejected.