Does Crab N Spice require that
Crab_N_Spice Franchise · 2024 FDDAnswer from 2024 FDD Document
[Item 8: RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES]
- D. Food Suppliers. You will purchase all of your food products and supplies from our approved suppliers.
- E. Proprietary Products. Crab N Spice Seasoning and Lemon Garlic Seasoning and branded apparel will be purchased from us directly. We are the only approved supplier for these products.
Us or our Affiliates as Supplier
We will be the supplier of seasonings that you must purchase. Outside of this, you will not purchase any products or services from us or our Affiliates.
Ownership of Suppliers
Outside of your requirement to purchase some of the inventory from us, none of our officers owns an interest in any supplier to our franchisees.
Alternative Suppliers
If you want to use a supplier that is not on our list of approved suppliers, you must request our approval in writing. We will grant or revoke approvals of suppliers based on criteria appropriate to the situation, which may include evaluations of the supplier's capacity, quality, financial stability, reputation, and reliability; inspections; product testing, and performance reviews. Our criteria for approving suppliers are not available to you. We permit you to contract with alternative suppliers who meet our criteria only if you request our approval in writing, and we grant approval. There is no fee for us to review or approve an alternate supplier. We will provide you with written notification of the approval or disapproval of any supplier you propose within 30 days after receipt of your request. We may grant approvals of new suppliers or revoke past approvals of suppliers on written notice to you, or by updating our Manual.
Issuing Specifications and Standards
We issue specifications and standards to you for applicable aspects of the franchise in our Manual and/or in written directives. We may issue new specifications and standards for any aspect of our brand system, or modify existing specifications and standards, at any time by revising our Manual and/or issuing new written directives (which may be communicated to you by any method we choose). We will generally (but are not obligated to) issue new or revised specifications only after thorough testing in our headquarters, in company-owned outlets, and/or a limited market test in multiple units.
Revenue to Us and Our Affiliates
We will derive revenue from the required purchases and leases by franchisees. Our total revenue from 2023 was $. Our revenue from all required purchases and leases of products and services by franchisees in 2023 was $. The percentage of our total revenues that were from required purchases or leases in 2023 was %.
Proportion of Required Purchases and Leases
We estimate that the required purchases and leases to establish your business are 80% to 90% of your total purchases and leases to establish your business.
We estimate that the required purchases and leases of goods and services to operate your business are 40% to 60% of your total purchases and leases of goods and services to operate your business.
[Item 8: RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES]
Item 8 RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES
Generally
We have the right to require you to purchase or lease all goods, services, supplies, fixtures, equipment, inventory, computer hardware and software, real estate, or comparable items related to establishing or operating your business (1) either from us or our designee, or from suppliers approved by us, or (2) according to our specifications.
Specific Obligations
- C. Point-of-sale software and hardware, and related software and hardware. You must purchase (or lease) the point-of-sale software and hardware, and related software and hardware, that we specify and you will be required to purchase the email addresses you will use in operating the franchised business from us. See Item 11 for more details.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 17–19)
What This Means (2024 FDD)
According to Crab N Spice's 2024 Franchise Disclosure Document, franchisees are required to purchase certain items from approved or designated sources. Specifically, all food products and supplies must be purchased from Crab N Spice's approved suppliers. Additionally, Crab N Spice Seasoning and Lemon Garlic Seasoning, along with branded apparel, must be purchased directly from Crab N Spice, as they are the only approved supplier for these proprietary products. Franchisees must also purchase or lease point-of-sale software and hardware that Crab N Spice specifies, and they are required to purchase email addresses used for operating the franchised business from Crab N Spice.
Crab N Spice maintains the right to mandate that franchisees purchase or lease all goods, services, supplies, fixtures, equipment, inventory, computer hardware and software, real estate, or comparable items necessary for establishing or operating the business either from Crab N Spice or its designee, or from suppliers approved by Crab N Spice, or according to their specifications. While franchisees are required to purchase some inventory from Crab N Spice, none of Crab N Spice's officers owns an interest in any supplier to the franchisees.
If a franchisee wishes to use a supplier not already on the approved list, they must request written approval from Crab N Spice. Approvals are granted or revoked based on criteria such as the supplier's capacity, quality, financial stability, reputation, and reliability, which are not disclosed to franchisees. Crab N Spice will provide written notification of approval or disapproval within 30 days of the request. Crab N Spice may also issue new specifications and standards for any aspect of the brand system or modify existing ones at any time by revising their Manual or issuing new written directives.
Crab N Spice estimates that required purchases and leases to establish the business account for 80% to 90% of the franchisee's total establishment purchases and leases. Furthermore, the required purchases and leases of goods and services to operate the business are estimated to be 40% to 60% of the franchisee's total operational purchases and leases. While Crab N Spice does not currently receive payments from designated suppliers based on franchisee purchases, the franchise agreement does not prohibit them from doing so in the future.