Can the Franchisor or its affiliates be an approved supplier for Closet Storage Concepts franchisees?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
and specifications as set forth in this Agreement and the Operations Manual, including, but not limited to, standards, specifications of product and service quality and uniformity, and equipment and software compatibility among individual Closet & Storage Concepts System franchises, and any revisions or amendments. Franchisee shall purchase and use only products and services, including equipment, vehicles, fixtures, signs, branded products or services, inventory, supplies, logo-imprinted products, software and hardware which Franchisor approves, including purchasing from approved suppliers or a designated sole supplier for any items. Franchisor and its affiliates may be an approved supplier or designated sole supplier for any purchases of products or services. Franchisor may charge a software setup fee. Franchisee may purchase or obtain these products and services through Franchisor or a supplier approved by Franchisor. Franchisee cannot be a supplier to other franchisees and cannot purchase items from another franchisee without Franchisor's express written approval.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2025 FDD)
According to Closet Storage Concepts's 2025 Franchise Disclosure Document, Closet Storage Concepts and its affiliates can be an approved or designated sole supplier for products or services that franchisees are required to purchase. This means that Closet Storage Concepts can directly profit from the sale of goods and services to its franchisees.
As a Closet Storage Concepts franchisee, you are obligated to purchase and use only products and services, including equipment, vehicles, fixtures, signs, branded products, inventory, supplies, logo-imprinted products, software, and hardware, that Closet Storage Concepts approves. This includes purchasing from approved suppliers or a designated sole supplier. If Closet Storage Concepts or its affiliates act as the supplier, franchisees must purchase from them.
Closet Storage Concepts also has the right to receive fees and other payments from other suppliers in connection with franchisee purchases. These fees can be used for Closet Storage Concepts's own purposes. This arrangement could incentivize Closet Storage Concepts to approve suppliers that provide them with additional financial benefits, which may or may not translate to the lowest prices or best quality for the franchisee. Franchisees are allowed to suggest new products or services to Closet Storage Concepts for use in the Closet Storage Concepts system businesses.