Is a Deck Medic franchisee required to purchase certain System Supplies from Sherwin Williams?
Deck_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
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Purchase Agreements and Cooperatives
We may, in our discretion, negotiate purchase agreements, including price terms, with designated suppliers for source restricted goods and services on behalf of the System. We may establish preferred vendor programs with suppliers on behalf of some or all of the Deck Medic Businesses under the System and, in doing so, we may limit the number of approved vendors and/or suppliers that you may purchase from and we may designate one vendor as your sole supplier. We have entered into a purchase agreement with Sherwin Williams for certain System Supplies, comprised of select products and equipment, that must be purchased for use in your Deck Medic Business. We have also entered into a purchase agreement with Image 360 for the service vehicle wraps that you must purchase for your service vehicle. There are no purchasing or distribution cooperatives for source restricted products or services that you must join. You may receive material benefits for using our designated or approved suppliers.
Our Right to Receive Compensation and Our Revenue from Source Restricted Purchases
We and/or our affiliates may receive rebates, payments and other material benefits from suppliers based on franchisee purchases and we reserve the right to institute and expand rebate programs in the future. During the fiscal year ending December 31, 2023, we did not earn any revenue from approved suppliers based on our franchisees' purchases. Our affiliate DM Supplies receives a rebate of 3% from all franchisee purchases from Sherwin Williams.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 19–22)
What This Means (2024 FDD)
According to Deck Medic's 2024 Franchise Disclosure Document, franchisees are required to purchase certain System Supplies from Sherwin Williams. Deck Medic has established a purchase agreement with Sherwin Williams for select products and equipment that franchisees must use in their Deck Medic business. This means that a portion of the supplies necessary for operating the franchise is mandated to be purchased from this specific vendor. Deck Medic may also limit the number of approved vendors and designate one vendor as the sole supplier.
In addition to Sherwin Williams, franchisees must also purchase service vehicle wraps from Image 360, as Deck Medic has a purchase agreement with them as well. Deck Medic also exclusively controls the types, manufacturers, and sources of supply of the semi-transparent oil-based stains and stripping/cleaning products that franchisees must use. Franchisees are required to maintain an initial and ongoing inventory of System Supplies, which must be purchased from Deck Medic, its affiliates, or designated suppliers.
Deck Medic, including its affiliates, may receive rebates, payments, and other benefits from suppliers based on franchisee purchases, and they reserve the right to implement and expand rebate programs in the future. For example, DM Supplies, an affiliate, receives a 3% rebate from all franchisee purchases from Sherwin Williams. During the fiscal year ending December 31, 2023, DM Supplies earned $3,498.23 in revenue from franchisee purchases made during the fiscal year ending December 31, 2022. This arrangement means that Deck Medic benefits financially from these mandated purchases, which could influence their choice of designated suppliers.