Can Cinch I.T. require me to enter into agreements with specific suppliers?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
e 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. If we have not responded in writing within 30 days of our written receipt of such information or product samples from you, or the delivery of test results if testing is conducted, then the request will be deemed rejected by us. In providing such approval we may consider not just the quality standards of the products or services, but the delivery capabilities, financing terms and ability of the supplier to service our Franchise System as a whole.
We formulate and modify specifications and standards imposed upon franchisees by evaluating the market acceptance of products and the financial stability of suppliers. We do not have to issue our specifications and standards to franchisees and/or approved suppliers, nor are criteria for supplier approval made available to franchisees.
We may terminate the use of any products or services, or any supplier of such items or services, that does not meet our then-current standards by giving you written notice.
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 require franchisees to enter into agreements with specific suppliers that they have approved. Franchisees are required to purchase hardware and software only from suppliers designated as required, recommended, or approved by Cinch I.T., which may include Cinch I.T. and its affiliates. Cinch I.T. may change approved and required suppliers from time to time, and will provide a current list of approved suppliers through updates to the Operations Manual or other forms of communication.
Cinch I.T. estimates that approximately 25% to 100% of a franchisee's expenditures for leases and purchases in establishing the Cinch I.T. Franchised Business will be for goods and services that must be purchased either 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 approximately 90% to 100% of expenditures will be for goods and services that must be purchased from either Cinch I.T., its affiliate, a designated supplier, or in accordance with their standards and specifications.
If a franchisee desires to purchase, lease, or use any products, services, or other items from a supplier Cinch I.T. has not pre-approved, the franchisee must submit sufficient written information about the proposed new supplier to enable Cinch I.T. to approve or reject either the supplier or the particular item(s). Cinch I.T. does charge a fee for evaluating alternative suppliers, services, and products; the franchisee must pay Cinch I.T. 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. If Cinch I.T. has not responded in writing within 30 days of their written receipt of such information or product samples from the franchisee, or the delivery of test results if testing is conducted, then the request will be deemed rejected by Cinch I.T.
Cinch I.T. may limit the number of approved suppliers with whom a franchisee may deal, designate sources that the franchisee must use, and/or refuse any request for alternative suppliers for any reason, including that Cinch I.T. has already designated an exclusive source (which may be Cinch I.T. or its affiliates) for any particular item or service if they believe doing so is in the best interest of their Franchise System. Cinch I.T. has the right to designate a single supplier for the Computer System and may require franchisees to maintain service support contracts and/or maintenance service contracts and implement and periodically make upgrades and changes to the computer hardware and software, and credit card, debit card and other noncash payment systems, designating the vendor(s) for these support service contracts and maintenance service contracts.