What are the specific obligations of a Deer Solution franchisee regarding pre-opening purchases and leases (Item 9) and how do these relate to restrictions on sources of products and services (Item 8)?
Deer_Solution Franchise · 2025 FDDAnswer from 2025 FDD Document
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ITEM 8 RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES
You may only offer and sell the Approved Services and Products that we designate and you may only use those products, supplies, equipment, technology systems, and services that we authorize and designate in writing. To ensure that our standards and specifications of quality, service and System development are maintained, you must operate your Deer Solution Business in strict conformity with the Franchise Agreement and the methods, standards, specifications, and sources of supply that we designate and prescribe in the Manuals.
Source Restricted Purchases and Leases – Generally
We require that you purchase or lease certain source restricted goods and services for the development and operation of your Deer Solution 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. 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.
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, APS Innovates, LLC is currently designated as an approved supplier of deer repellent and provides central purchasing and fulfillment services to franchisees. Our affiliate, Two Knights Media, Inc. was designated as an approved supplier of software, media development, marketing management, website design and SEO services until January 1, 2025 when R3volution Brands Inc. began providing these services as well as Sales and Support Center services. Our affiliate, VIP Rewards Center, LLC is currently designated as an approved supplier of rewards program services to franchisees. Except for APS Innovates, LLC, Two Knights Media, Inc., and VIP Rewards Center, LLC, currently we are not and our affiliates are not the only approved suppliers of the source restricted goods and services identified below. Except as to Kris Goodrich, Jaime Goodrich, and Benjamin Goodrich, no officer of ours currently owns an interest in any of our designated suppliers.
During the fiscal year ending December 31, 2024, our affiliate APS Innovates, LLC earned $43,481.73 in revenue from franchisee purchases. During the fiscal year ending December 31, 2024, our affiliate Two Knights Media, Inc. earned $98,983.89 in revenue from franchisee purchases. During the fiscal year ending December 31, 2024, our affiliate VIP Rewards Center, LLC earned $9,621.22 in revenue from franchisee purchases.
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. 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 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 80% of your total purchases and leases in establishing the Franchised Business and approximately 40% of the on-going operating expenses of your Franchised Business.
We currently require that you purchase or lease the following source restricted goods and services from either us or our designated supplier:
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- System Supplies You must maintain an initial and ongoing inventory of System Supplies. You must purchase the System Supplies from us, our affiliates, or our designated suppliers.
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- Branded Items and Marketing Materials All materials bearing the Licensed Marks including, but not limited to, stationary, business cards, brochures, apparel, signs and displays, must meet our standards and specifications, and must be purchased from either us directly or our designated suppliers. All of your marketing materials must comply with our standards and specifications and must be approved by us before you use them. You may market your Deer Solution Business through approved digital media and social media platforms provided that you do so in accordance with our digital media and social media policies. You must purchase all branded marketing materials from either us or our designated exclusive supplier. We may require that you exclusively use, at your cost, our designated supplier for social and digital media marketing services and exclusively use, at your cost, our social media platforms, vendors, and marketing channels.
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- Business Management System and Computer Equipment Currently you are required to purchase, license, and utilize a business management system as designated in our operations manual. You must purchase and maintain a computer system at your Administrative Office. In general, you will be required to obtain a computer system that will consist of certain hardware, software, and peripheral devices such as printers. You will be required to meet our requirements involving back office and business management systems, security systems, printers, back-up systems, and high-speed internet access.
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- Credit Card Processing You must use our designated supplier and vendor for credit card processing which may be integrated with the business management system that we designate. Credit card processing fees will, generally, be based on a percentage of all credit card processed Gross Sales.
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- Computer System You must purchase and maintain a computer system at your Administrative Office and an Android tablet and Android phone that maintains cellular internet access for each dispatched user / service vehicle that you operate.
What This Means (2025 FDD)
According to Deer Solution's 2025 Franchise Disclosure Document, franchisees are required to purchase or lease certain goods and services from specific, restricted sources. These restrictions are put in place to maintain the quality, service standards, and overall system development of the Deer Solution brand. These source-restricted items include system supplies, branded items and marketing materials, a business management system and computer equipment, credit card processing services, sales and support center services, service vehicles, and insurance coverage. Deer Solution may designate itself or its affiliates as the exclusive suppliers for these goods and services, irrespective of other competing suppliers. If a supplier isn't designated in the manuals, franchisees must buy from suppliers who meet Deer Solution's specifications and standards.
Deer Solution franchisees must purchase or lease service vehicles that meet the brand's standards and specifications, and these vehicles must be used exclusively for the franchised business. Franchisees are also obligated to maintain an initial and ongoing inventory of system supplies, which must be purchased from Deer Solution, its affiliates, or designated suppliers. All materials bearing the licensed marks, such as stationery, business cards, and apparel, must meet Deer Solution's standards and be purchased from approved sources. Additionally, franchisees must use Deer Solution's designated supplier for credit card processing, with fees based on a percentage of gross sales.
Furthermore, franchisees are required to purchase, license, and utilize a business management system as designated in the operations manual, along with maintaining a computer system at their administrative office. They must also adhere to Deer Solution's requirements for back-office systems, security, printers, backup systems, and high-speed internet access. Deer Solution is the exclusive supplier of sales and support center services, for which franchisees must pay fees weekly, with Deer Solution reserving the right to deduct up to 8.5% of gross sales for these fees. Franchisees must also obtain the insurance coverage required by Deer Solution from an acceptable carrier, naming Deer Solution as an additional insured.