Can Crisp & Green limit the number of approved suppliers or brands a franchisee may use?
Crisp_Green Franchise · 2024 FDDAnswer from 2024 FDD Document
ted in a written agreement. We may impose limits on the number of suppliers (which may include us or our affiliates) and/or brands for any of the foregoing items. In the event you use any brand or supplier that is not then approved by us, we may charge you up to $1,500 per day until such unauthorized use ceases.
We apply the following general criteria in approving a proposed supplier or brand: (i) the ability to make products or provide services in conformity with our specifications; (ii) the reputation and integrity of the supplier or brand; (iii) the financial condition and insurance coverage of the supplier; and (iv) System uniformity. Determinations of whether a supplier or brand meets our specifications and quality and safety standards will be made by us in our sole discretion. We have no obligation to approve any supplier or brand. We may limit the number of approved suppliers or brands with whom you may deal, designate sources that you must use, and/or refuse any of your requests for any reason, including that we have already designated an exclusive source (which in the future might be us or our affiliate) for a particular product or service or if we believe that doing so is in the best interests of the System. We are not required to make available to you or to any supplier our criteria for product or supplier approval if we deem such criteria to be confidential.
Revenue Derived from Franchisee Purchases and Leases
We and/or our affiliates may derive revenue from franchisee purchases and leases to the extent that you purchase products or services directly from us or our affiliates. In our last fiscal year ended December 31, 2023, however, neither we nor our affiliates received any revenues from the sale of goods and services to our franchisees.
In addition, we and/or our affiliates may derive revenue or other material consideration based on your purchases of goods and services from our approved suppliers in the form of promotional allowances, volume discounts, rebates, and other payments that approved or required suppliers make to us and our affiliates. We and our affiliates may use all amounts received from suppliers, whether or not based on your and other franchisees' prospective or actual dealings with them, without restriction for any purposes that we and our affiliates deem appropriate.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 26–31)
What This Means (2024 FDD)
According to Crisp & Green's 2024 Franchise Disclosure Document, Crisp & Green has the authority to limit the number of approved suppliers or brands that a franchisee can use. They can also designate specific sources that franchisees must use. Crisp & Green can refuse a franchisee's requests to use a different supplier or brand for any reason, especially if they have already designated an exclusive source for a particular product or service, which could be Crisp & Green or an affiliate.
If a franchisee wants to use a brand or supplier not already approved, they must notify Crisp & Green and provide sufficient information for evaluation. The franchisee must pay a $2,500 fee to cover investigation costs. Crisp & Green will then decide whether the brand or supplier meets their standards. If a franchisee uses an unapproved brand or supplier, Crisp & Green may charge up to $1,500 per day until the unauthorized use stops.
Crisp & Green applies general criteria when approving a proposed supplier or brand, including the ability to conform to specifications, the supplier's reputation and integrity, their financial condition and insurance coverage, and system uniformity. Crisp & Green will make the final determination on whether a supplier or brand meets their standards at their sole discretion. They are not obligated to share their approval criteria if they deem it confidential.