If a Cool Binz franchisee requests evaluation of alternative suppliers, are they required to reimburse the franchisor regardless of approval?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
FEES**
| Name of Fee (Note 1) | Amount | Due Date | Remarks (Note 1) |
|---|---|---|---|
| Indemnification | Actual costs, will vary under circumstances | As incurred | You must reimburse us if we are held liable for claims directly or indirectly arising out of your COOL BINZ Business’s operation. |
Source: Item 6 — OTHER FEES (FDD pages 19–27)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, if a franchisee requests that Cool Binz evaluate alternative suppliers for required purchases, the franchisee is responsible for reimbursing Cool Binz for the actual costs incurred during the evaluation process. This reimbursement is required regardless of whether Cool Binz ultimately approves the alternative supplier.
This policy means that a Cool Binz franchisee will need to carefully consider the potential costs before requesting an evaluation of alternative suppliers. The 'actual costs' could include expenses related to research, testing, and administrative work performed by Cool Binz to assess the suitability of the proposed supplier. Since these costs can vary, it's important for franchisees to discuss potential expenses with Cool Binz beforehand to avoid unexpected financial burdens.
This type of fee is not uncommon in franchising, as franchisors often want to maintain control over their supply chain to ensure quality and consistency across all franchise locations. By requiring franchisees to cover the costs of evaluating alternative suppliers, Cool Binz can discourage frivolous requests and ensure that only serious proposals are considered. Franchisees should weigh the potential benefits of using an alternative supplier against the certainty of having to pay for the evaluation, irrespective of the outcome.