Can Crave limit the number of approved suppliers a franchisee may deal with?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
e right to an additional, new or successor franchise.
We may establish strategic alliances or preferred vendor programs with suppliers that are willing to supply some products, equipment, or services to some or all the restaurants and food trucksin our System. We and/or our affiliates may negotiate supply contracts with our suppliers under which we are able to purchase products, equipment, supplies, services, and other items at a price that will benefit us and our franchisees. If we do establish those types of alliances or programs, we may limit the number of approved suppliers with whom you may deal, we may designate sources that you must use for some or all products, equipment and services, and we may refuse to approve proposals from franchisees to add new suppliers if we believe that approval would not be in the best interests of the System or the franchised network of restaurants and food trucks.
We have the right to collect and retain any and all allowances, rebates, credits, incentives, or benefits (collectively, "Allowances") offered by manufacturers, suppliers, and distributors to you, to us, or to our affiliates based upon your purchases of products and services from manufacturers, suppliers, and distributors. We or our affiliates will have all your right, title, and interest in and to any and all of these Allowances. We or our affiliates may collect and retain any or all these Allowances without restriction (unless otherwise instructed by the manufacturer, supplier, or distributor). We may also choose to contribute these Allowances to the Brand Development Fund, but if we do so it does not reduce or eliminate your obligation to pay the brand development fee. For the fiscal year ended December 31, 2024, neither we nor our affiliates earned revenue from Allowances.
For the catering or delivery services your Restaurant will provide, we anticipate that your employees will use their personal vehicles to provide these services from your Restaurant. We have the right to require you to have temporary signage placed on each delivery vehicle. We expect that all delivery vehicles will be kept clean, in good working order and be properly insured. You must have each person provide those services to comply with all laws, regulations, and rules of the road and to use due care and caution operating and maintaining the motor vehicles. Except as described in this paragraph, we do not have any standards or exercise control over any motor vehicle that you use. You must also offer delivery through third-party delivery services like Grubhub, Uber Eats, and DoorDash.
Food Trucks may also provide catering and delivery services in the designated territory. We expect that all Food Trucks will be kept clean, in good working order and be properly insured according to our System requirements. Each person who will drive the Food Truck must comply with all laws, regulations and rules of the road and must use due care and caution in operating the Food Truck. Food Trucks must be professionally washed at least once each week.
All advertising and promotional materials, signs, decorations, paper goods (including menus and all forms and stationery used in the Franchised Business) and other items we designate must bear the Marks in the form, color, location, and manner we prescribe. In addition, all your advertising and promotion in any medium must be conducted in a dignified manner and must conform to the standards and requirements in the Manual or otherwise. You must obtain our approval before you use any advertising and promotional materials and plans if we have not prepared or approved them during the 12 months before their proposed use.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 26–30)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, Crave has the ability to limit the number of approved suppliers that franchisees may deal with. Crave may establish strategic alliances or preferred vendor programs with suppliers. If Crave establishes these alliances or programs, they may limit the number of approved suppliers with whom a franchisee may deal. Crave may also designate sources that franchisees must use for some or all products, equipment, and services. Additionally, Crave may refuse to approve proposals from franchisees to add new suppliers if they believe that approval would not be in the best interests of the System or the franchised network of restaurants and food trucks.
Crave also requires franchisees to purchase or lease their Food Truck from their designated supplier, Master Chef Mobile Kitchens, and logo'd paper products from Imperial Dade. If a franchisee wishes to purchase or use any products or purchase from a supplier that Crave has not previously approved, the franchisee must submit a written request for approval and pay Crave's then-current evaluation fee. Crave can require that their representatives be permitted to inspect the supplier's facilities and that samples from the supplier be delivered for testing.
Crave estimates that purchases from them or approved suppliers, or that must conform to their specifications, will represent approximately 68% to 78% of a franchisee's total purchases in establishing the Franchised Business, and approximately 50% of their total purchases in the continuing operation of the Franchised Business. This means a significant portion of a franchisee's expenses are tied to approved or designated suppliers, giving Crave considerable control over the supply chain and product quality. This is a fairly common practice in franchising to ensure brand consistency and quality control, but it also reduces the franchisee's autonomy in sourcing products and potentially negotiating better deals.
Crave also maintains the right to collect and retain any and all allowances, rebates, credits, incentives, or benefits offered by manufacturers, suppliers, and distributors to the franchisee, to Crave, or to their affiliates based upon the franchisee's purchases of products and services. This could impact a franchisee's potential cost savings and profitability, as Crave benefits directly from purchase incentives.