Does Cinch I.T. receive fees from suppliers as a condition of approving them?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
s prescribed in our Operations Manual.
Revenue from Franchisee Purchases
We and our affiliates may receive revenue or other benefits like rebates, discounts, and allowances from authorized or designated suppliers based upon their dealings with you and other franchisees. Our affiliate Cinch HD derives income in the form of rebates paid to it by certain approved vendors or referral partners in exchange for referrals they receive from our franchisees.
In our most recent fiscal year ending December 31, 2023, Cinch HD LLC received a rebate of $59,565 from a referral partner that franchisees are not required to purchase from.
We may use the monies we receive without restriction for any purpose we deem appropriate or necessary. Rebate, discount or allowance programs vary depending on the supplier and the nature of the product or service. Suppliers may pay us based upon the quantities of products our franchisees purchase from them. We may receive fees from a supplier as a condition of our approval of that supplier. Not every supplier pays rebates to us. We do not provide material benefits to franchisees (for example, renewal of existing or granting additional franchises) based on their use of designated or approved suppliers. We may negotiate supply arrangements with suppliers for the benefit of franchisees.
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, Cinch I.T. may receive fees from a supplier as a condition of approving that supplier. The FDD also states that Cinch I.T. and its affiliates may receive revenue or other benefits like rebates, discounts, and allowances from authorized or designated suppliers based upon their dealings with franchisees. Cinch HD, an affiliate, derives income from rebates paid by certain approved vendors or referral partners in exchange for referrals from franchisees.
In the fiscal year ending December 31, 2023, Cinch HD LLC received a rebate of $59,565 from a referral partner that franchisees are not required to purchase from. Cinch I.T. can use the monies received without restriction for any purpose they deem appropriate or necessary. Not every supplier pays rebates to Cinch I.T.
If a franchisee wants to use a supplier that is not pre-approved, they must submit written information about the proposed new supplier. At the franchisee's expense, Cinch I.T. may inspect the supplier's facilities or conduct testing of the new product or service. 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 the actual cost of laboratory fees, professional fees, and travel and living expenses, as well as any other fees Cinch I.T. pays to third parties in furtherance of the evaluation.