Can Desi District Franchise Group negotiate prices with vendors on behalf of the system?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
- 8.4 Purchasing. Desi District Franchise Group may negotiate prices and terms with vendors on behalf of the System. Desi District Franchise Group may receive rebates, payments or other consideration from vendors in connection with purchases by franchisees. Desi District Franchise Group has the right (but not the obligation) to collect payments from Franchisee on behalf of a vendor and remit the payments to the vendor and to impose a reasonable markup or charge for administering the payment program. Desi District Franchise Group may implement a centralized purchasing system. Desi District Franchise Group may establish a purchasing cooperative and require Franchisee to join and participate in the purchasing cooperative on such terms and conditions as Desi District Franchise Group may determine.
- 8.5 No Liability of Franchisor. Desi District Franchise Group shall not have any liability to Franchisee for any claim or loss related to any product provided or service performed by any Approved Vendor or Required Vendor, including without limitation defects, delays, or unavailability of products or services.
- 8.6 Product Recalls. If Desi District Franchise Group or any vendor, supplier, or manufacturer of an item used or sold in Franchisee's Business issues a recall of such item or otherwise notifies Franchisee that such item is defective or dangerous, Franchisee shall immediately cease using or selling such item, and Franchisee shall at its own expense comply with all instructions from Desi District Franchise Group or the vendor, supplier, or manufacturer of such item with respect to such item, including without limitation the recall, repair, and/or replacement of such item.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, Desi District Franchise Group has the authority to negotiate prices and terms with vendors on behalf of the entire franchise system. This means that Desi District can leverage the collective buying power of all its franchisees to potentially secure better deals on supplies and services. Desi District may also receive rebates, payments, or other forms of compensation from these vendors based on franchisee purchases.
Desi District also has the right, but not the obligation, to collect payments from franchisees on behalf of vendors and remit those payments to the vendors. In doing so, Desi District can impose a reasonable markup or charge to franchisees for administering this payment program. Furthermore, Desi District has the option to implement a centralized purchasing system or establish a purchasing cooperative, which franchisees may be required to join and participate in under the terms and conditions set by Desi District.
While these arrangements can potentially benefit franchisees through cost savings and streamlined purchasing processes, it's important to note that Desi District assumes no liability for any claims or losses related to products or services provided by approved vendors. This includes issues such as defects, delays, or unavailability of products or services. Franchisees bear the risk of these vendor-related problems, highlighting the importance of carefully evaluating the approved vendors and understanding the terms of their agreements.
In the event of a product recall, Desi District or the vendor will notify the franchisee, who must immediately stop using or selling the item and comply with all instructions regarding the recall, repair, or replacement of the item, at the franchisee's own expense. This underscores the franchisee's responsibility to stay informed about product recalls and to act swiftly to protect customers and maintain the integrity of the Desi District brand.