Is a Cinch I.T. franchisee required to purchase and install specific equipment?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
cations of System Standards and/or names of approved suppliers.
You must purchase and install, at your expense, all equipment (including smartphone, computer, printer, and software), as we may reasonably direct periodically; and refrain from installing or permitting to be installed on or about the premises of your Franchised Business, without our prior written consent, any equipment, or other items not previously approved as meeting our System Standards. If you elect to purchase a work vehicle it must be branded at your expense with the CINCH I.T. wrap graphic according to our specifications, which we will provide to you.
We will inspect your Franchised Business as often as we deem necessary to ensure that our System Standards are maintained. If we find anything that does not meet our standards, you will be required to correct them within a reasonable period of time. If you fail to take corrective action, we may close the Franchised Business until the corrective action is taken or otherwise terminate your Franchise Agreement.
Purchases from Approved Suppliers
In addition to the above, we may require that you, at your expense, enter into agreements with suppliers approved by us. Currently, you are required to purchase hardware and software only from suppliers designated as required, recommended or approved by us, which may include us and our affiliates. We may change approved and required suppliers from time to time.
Except for us and our affiliates disclosed in this Disclosure Document, none of our officers own an interest in any of our approved suppliers.
We will provide you with a current list of approved suppliers (including required and recommended suppliers) through updates to the Operations Manual or other forms of communication.
Proportion of Purchases Subject to Specifications
We estimate that approximately 25% to 100% of your expenditures for leases and purchases in establishing your CINCH I.T. Franchised Business will be for goods and services that must be purchased either from us, our affiliate or a designated supplier, or in accordance with
our standards and specifications. We estimate that approximately 90% to 100% of your expenditures on an ongoing basis will be for goods and services that must be purchased from either us, our affiliate, a designated supplier or in accordance with our standards and specifications.
Approval of Alternate Suppliers
If you desire to purchase, lease or use any products, services or other items from a supplier we have not pre-approved, you must submit to us sufficient written information about the proposed new supplier to enable us to approve or reject either the supplier or the particular item(s). At our request, you must submit to us samples of the proposed product(s) for our examination so that we can determine whether they meet our quality standards. We also have the right to require that our representatives be permitted to inspect the proposed supplier's facilities, or to conduct appropriate testing of the proposed new product or service, at your expense. We do charge a fee for evaluating alternative suppliers, services and products; you must pay us the greater of $500 or the actual cost of the review and/or inspection, including the actual cost of laboratory fees, professional fees, and travel and living expenses, as well as any other fees we pay to third parties in furtherance of the evaluation.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 22–26)
What This Means (2024 FDD)
According to Cinch I.T.'s 2024 Franchise Disclosure Document, franchisees are required to purchase and install specific equipment to operate their franchised business. Cinch I.T. may direct franchisees to purchase and install equipment such as a smartphone, computer, printer, and software. These purchases are at the franchisee's expense. Franchisees must also refrain from installing any equipment that does not meet Cinch I.T.'s system standards without prior written consent. If a franchisee chooses to purchase a work vehicle, it must be branded with the Cinch I.T. wrap graphic according to their specifications, also at the franchisee's expense.
The FDD also states that franchisees must use computer software, hardware components, and accessories as detailed in Items 7 and 11 of the FDD. Cinch I.T. has the right to designate a single supplier for the computer system but can also appoint additional or different suppliers. Cinch I.T. may require franchisees to maintain service support contracts and maintenance service contracts and implement periodic upgrades and changes to computer hardware and software, as well as credit card, debit card, and other noncash payment systems. Cinch I.T. may also designate the vendors for these support and maintenance service contracts.
Cinch I.T. estimates that 25% to 100% of a franchisee's expenditures for leases and purchases in establishing the franchise will be for goods and services that must be purchased from Cinch I.T., its affiliate, or a designated supplier, or in accordance with their standards and specifications. On an ongoing basis, Cinch I.T. estimates that 90% to 100% of expenditures will be for goods and services that must be purchased from Cinch I.T., its affiliate, a designated supplier, or according to their standards and specifications. This high percentage indicates that franchisees have limited flexibility in sourcing products and services and must adhere closely to Cinch I.T.'s requirements. Cinch I.T. does not have to issue their specifications and standards to franchisees and/or approved suppliers, nor are criteria for supplier approval made available to franchisees.
If a franchisee wants to use a supplier that Cinch I.T. has not pre-approved, the franchisee must submit sufficient written information about the proposed supplier. At Cinch I.T.'s request, the franchisee must submit samples of the proposed products for examination to determine if they meet quality standards. Cinch I.T. can also inspect the proposed supplier's facilities or conduct testing of the new product or service at the franchisee's expense. Cinch I.T. charges a fee for evaluating alternative suppliers, services, and products; the franchisee must pay the greater of $500 or the actual cost of the review and/or inspection, including laboratory fees, professional fees, travel, and living expenses, as well as any other fees paid to third parties for the evaluation. If Cinch I.T. does not respond within 30 days of receiving the information or product samples, the request is deemed rejected.