How do the restrictions on suppliers for Crave (Item 8) relate to the franchisee's obligations (Item 9)?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
| Obligation | Article or Section in Agreement | | Disclosure Document | |---|---|---|---| | | | | Item | | a. Site selection and acquisition/ | FA – Article 2 | Items 8 and 11 | | | lease | MUDA – Section 3 | | | | b. Pre-opening purchases/leases | FA – Articles 6, 7 and 8 | Items 6, 7, 8 and 11 | | | c. Site development and other pre- | FA – Article 2 | Items 8 and 11 | | | opening requirements | | | | | d. Initial and ongoing training | FA – Article 6 | Items 6, 7 and 11 | | | e. Opening | FA – Articles 2 and 6 | Item 11 | | | Obligation | Article or Section in Agreement | | Disclosure Document Item | | f. Fees | FA – Articles 3, 4, 6, 7, 8, 11, 14 and 18 MUDA – Sections 2 and 3 | Items 5, 6, 7 and 11 | | | g. Compliance with standards and | FA – Articles 2, 3, 6, 8, 9, 10, 11 | Items 8, 11 and 14 | | | policies/ o You must purchase or lease and install all fixtures, furnishings, equipment (including point-of-sales system and associated hardware and software), décor items, signs and related items we require, all of which must conform to the standards and specifications stated in our Confidential Operations Manual (the "Manual") or otherwise in writing, unless you have first obtained our written consent to do otherwise. You may not install or permit to be installed on the Restaurant premises, or on or in the Food Truck, any fixtures, furnishings, equipment, décor items, signs, games, vending machines or other items without our written consent or that do not comply with our specifications.
To make sure that the highest degree of quality and service is maintained, you must operate the Franchised Business in strict conformity with the methods, standards, and specifications that we prescribe in the Manual or otherwise in writing. You must maintain in sufficient supply and use and sell at all times only those food and beverage items, ingredients, products, materials, supplies and paper goods that meet our standards and specifications. All menu items must be prepared in accordance with the recipes and procedures specified in the Manual or other written materials. You must not deviate from these standards and specifications by the use or offer of non-conforming items, or differing amounts of any items, without obtaining our written consent first. We can, and expect to, modify our standards and specifications as we deem necessary. We will provide you notice in the Manual or otherwise in writing (such as via email) of any changes in our standards and/or specifications.
You must permit us or our agents, during normal business hours, to remove a reasonable number of samples of food or non-food items from your inventory or from the Franchised Business free of charge for testing by us or by an independent laboratory to determine whether the samples meet our then-current standards and specifications. In addition to any other remedies we may have, we may require you to reimburse our costs for the testing if we have not previously approved the supplier of the item or if the sample fails to conform to our specifications.
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.
When deciding to grant new, additional or successor franchises, we consider many factors, including your compliance with the requirements described in this Item 8, the breach of which may be in default under your Franchise Agreement. Your compliance with the requirements of this Item 8 does not automatically give you the right to an additional, new or successor franchise.
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, Item 8 outlines restrictions on the sources from which franchisees can purchase goods and services, and Item 9 details the franchisee's obligations. Specifically, Item 8 states that franchisees must purchase or lease fixtures, furnishings, equipment, décor, and signs that conform to Crave's standards and specifications, as outlined in the Confidential Operations Manual. They cannot install any items without written consent from Crave or if the items do not comply with Crave's specifications. This directly relates to the franchisee's obligations, as compliance with these standards is listed as an obligation in Item 9.
Item 8 further explains that franchisees must operate the franchised business in strict accordance with Crave's methods, standards, and specifications, maintaining sufficient supply and using only approved food, beverage, ingredients, products, materials, supplies, and paper goods. Menu items must be prepared according to specified recipes and procedures. Crave retains the right to modify these standards and specifications, providing notice of changes in writing. Franchisees must also allow Crave or its agents to take samples for testing to ensure compliance with standards. Failure to use approved suppliers or meet specifications may result in the franchisee reimbursing Crave for testing costs.
Item 9 lists 'Compliance with standards and policies' as a franchisee obligation, referencing Articles 2, 3, 6, 8, 9, 10, and 11 of the Franchise Agreement and Items 8, 11, and 14 of the Disclosure Document. This means that the restrictions on suppliers detailed in Item 8 are directly tied to the franchisee's contractual obligations to maintain Crave's standards and policies. Failing to adhere to the approved supplier list and product specifications can lead to a breach of the Franchise Agreement, potentially resulting in penalties or termination of the franchise agreement.
Crave may establish strategic alliances or preferred vendor programs with suppliers. If these alliances or programs are established, Crave may limit the number of approved suppliers, designate mandatory sources for products, equipment, and services, and refuse to approve new suppliers if it is not in the best interest of the system. While compliance with Item 8 is a factor when Crave decides whether to grant new, additional, or successor franchises, it does not automatically guarantee the franchisee will receive one.