What are 'source restricted goods and services' for a Deck Medic franchise?
Deck_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
tricted Purchases and Leases – Generally**
We require that you purchase or lease certain source restricted goods and services for the development and operation of your Deck Medic Business. Source restricted goods and services are goods and services that must meet our specifications and/or must be purchased from an approved or designated supplier. We may designate a supplier (which may include us or our affiliates) as the exclusive supplier for the System. Our specifications and list of approved and designated suppliers is contained in our Manuals. We will notify you of any changes to our specifications or list of approved or designated suppliers. We may notify you of these changes in various ways, including written or electronic correspondence, amendments and updates to our Manuals, verbal and other forms of communication. If we have previously approved a supplier, and their standards fall below our designated standards, we will revoke our approval. We will notify you in writing of us revoking our approval. We formulate and modify our standards and specifications for products and services based on our industry experience and our management decisions as to the overall operation and expansion of the System or as we may otherwise designate and approve in writing.
Suppliers and Supplier Criteria
We may designate ourselves and our affiliates as exclusive suppliers of source restricted goods and services. We may designate ourselves or a third party as exclusive supplier irrespective of the existence of competing suppliers. If, in the Manuals, we do not designate a supplier for a particular item, you will purchase all such products, supplies and services from suppliers who meet our specifications and standards.
Our affiliate, DM Supplies is currently designated as an approved supplier of certain inventory items, including semi-transparent oil-based stains and stripping/cleaning products. Except for DM Supplies, currently, we are not and our affiliates are not approved suppliers of the source restricted goods and services identified below. Except as to DM Supplies, no officer of ours currently owns an interest in any of our designated suppliers.
If you want to purchase or lease a source restricted item from a supplier that has not been previously approved or designated by us in writing, you must send us a written request for approval and submit additional information that we may request. We may charge you a supplier review and testing fee and we may request that you send us samples from the supplier for testing and documentation from the supplier for evaluation. We may also require, subject to our discretion, that we be allowed to inspect the supplier's facilities. We will notify you of our approval or disapproval within a reasonable time, not to exceed 60 days, after we receive your written request for approval and all additional information and samples that we may request. We may, in our discretion, withhold our approval. When evaluating the approval of a particular supplier, among other things, we consider: whether the supplier can demonstrate to our reasonable satisfaction the ability to meet our standards, specifications and production requirements, the suppliers quality control, whether or not we are the exclusive supplier of the particular item, whether or not our affiliate or affiliates are the exclusive supplier of the particular item, and whether or not the suppliers approval, in our sole determination, will allow us to advance the overall interests of the System.
We estimate that your purchase of goods and services from suppliers according to our specifications, including your purchase of goods or services from our designated exclusive suppliers to represent approximately 90% of your total purchases and leases in establishing the Franchised Business and approximately 90% of the on-going operating
expenses of the Franchised Business. We currently require that you purchase or lease the following source restricted goods and services from either us or our designated supplier:
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, source restricted goods and services are those that franchisees must purchase or lease from approved or designated suppliers to meet Deck Medic's specifications. These goods and services are essential for maintaining the quality, service standards, and overall system development of the Deck Medic brand. Deck Medic may designate itself or its affiliates as the exclusive suppliers for these items, ensuring consistency throughout the franchise system. The specifications and list of approved suppliers are detailed in the Deck Medic manuals, and franchisees will be notified of any changes through various communication methods.
Specifically, Deck Medic requires franchisees to purchase or lease certain goods and services from approved sources. These include semi-transparent oil-based stains and stripping/cleaning products, which must be exclusively used in the franchised business and are controlled by Deck Medic regarding types, manufacturers, and supply sources. Additionally, franchisees must maintain an initial and ongoing inventory of system supplies from Deck Medic, its affiliates, or designated suppliers. All materials bearing the licensed marks, such as stationary, business cards, brochures, apparel, signs, and displays, must meet Deck Medic's standards and be purchased from approved sources. Marketing materials must also comply with Deck Medic's standards and be approved before use, with branded marketing materials sourced directly from Deck Medic or its exclusive supplier.
Furthermore, franchisees are required to exclusively license and use the designated SingleOps point of sale and business management system, along with QuickBooks, and maintain a computer system at their administrative office meeting Deck Medic's requirements for back office and point of sale systems, security, back-up, and high-speed internet access. Service vehicles must meet Deck Medic's standards, be insured for commercial use, and wrapped with approved branding. Franchisees must also use Deck Medic's designated supplier for credit card processing and obtain the required insurance coverage from an approved carrier, naming Deck Medic as an additional insured.
Deck Medic estimates that purchases from approved suppliers will constitute approximately 90% of the franchisee's total purchases and leases for establishing the franchised business and about 90% of ongoing operating expenses. This high percentage underscores the importance of maintaining relationships with approved suppliers and adhering to Deck Medic's sourcing requirements. Franchisees have the option to request approval for alternative suppliers, but Deck Medic reserves the right to charge a review and testing fee, request samples and documentation, and inspect the supplier's facilities before granting approval, which may be withheld at Deck Medic's discretion.