Does Crab N Spice require franchisees to purchase or lease real estate from Crab N Spice or its designees?
Crab_N_Spice Franchise · 2024 FDDAnswer from 2024 FDD Document
ND 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
The following are our current specific obligations for purchases and leases:
- A. Real Estate. Your business location is subject to our approval and must meet our specifications. You must use reasonable efforts to have your landlord sign our form of Rider to Lease Agreement (attached to this disclosure document as Exhibit D).
- B. Insurance.
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, Crab N Spice has the right to require franchisees to purchase or lease real estate related to establishing or operating their business either from Crab N Spice or its designee, or from suppliers approved by them, or according to their specifications. The franchisee's business location is subject to Crab N Spice's approval and must meet their specifications. Franchisees must use reasonable efforts to have their landlord sign Crab N Spice's form of Rider to Lease Agreement, which is attached to the disclosure document as Exhibit D.
This means that while Crab N Spice does not explicitly state that franchisees must purchase or lease real estate from them or their designees, they retain the right to impose such a requirement. At a minimum, Crab N Spice maintains significant control over site selection and lease terms. The requirement to use 'reasonable efforts' to get the landlord to sign Crab N Spice's Rider to Lease Agreement suggests that the standard lease agreement may need alterations to align with Crab N Spice's interests.
It is important for prospective franchisees to understand the implications of these controls. While Crab N Spice does not currently receive payments from any designated suppliers based on purchases by franchisees, the franchise agreement does not prohibit them from doing so in the future. This could potentially impact the franchisee's costs and profitability. Franchisees should carefully review Exhibit D, the Rider to Lease Agreement, to fully understand its terms and conditions and how it might affect their lease negotiations.