Does the requirement that goods comply with specifications prescribed by Crab N Spice constitute a 'designation of a source' under the Indiana Acts?
Crab_N_Spice Franchise · 2024 FDDAnswer from 2024 FDD Document
Any provision of the Agreement which would have any of the following effects is hereby modified to the extent required for the Agreement to be in compliance with the Indiana Acts:
- (1) Requiring goods, supplies, inventories, or services to be purchased exclusively from the franchisor or sources designated by the franchisor where such goods, supplies, inventories, or services of comparable quality are available from sources other than those designated by the franchisor.
However, the publication by the franchisor of a list of approved suppliers of goods, supplies, inventories, or services or the requirement that such goods, supplies, inventories, or services comply with specifications and standards prescribed by the franchisor does not constitute designation of a source nor does a reasonable right of the franchisor to disapprove a supplier constitute a designation.
This subdivision does not apply to the principal goods, supplies, inventories, or services manufactured or trademarked by the franchisor.
Source: Item 22 — CONTRACTS (FDD pages 50–51)
What This Means (2024 FDD)
According to Crab N Spice's 2024 Franchise Disclosure Document, the requirement that goods, supplies, inventories, or services comply with specifications and standards prescribed by Crab N Spice does not constitute designation of a source under the Indiana Acts. This falls under modifications made to ensure compliance with the Indiana Franchise Act and the Indiana Deceptive Franchise Practices Act.
This means that while Crab N Spice may set specific standards for the goods and services used in the franchise, this does not automatically mean they are designating a single, exclusive source. Franchisees may be able to source goods from different suppliers as long as those goods meet the franchisor's specifications.
This provision offers some flexibility to Indiana franchisees, potentially allowing them to find more competitive pricing or alternative suppliers, provided they meet Crab N Spice's quality and specification standards. However, it's important to note that this exception does not apply to principal goods, supplies, inventories, or services manufactured or trademarked by Crab N Spice, meaning those items must be sourced directly from the franchisor.