Does the Indiana Rider prevent Desi District from disapproving a supplier?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
Any provision of the Agreement which would have any of the following effects is hereby modified to the extent required for the Agreement to be in compliance with the Indiana Acts:
- (1) Requiring goods, supplies, inventories, or services to be purchased exclusively from the franchisor or sources designated by the franchisor where such goods, supplies, inventories, or services of comparable quality are available from sources other than those designated by the franchisor.
However, the publication by the franchisor of a list of approved suppliers of goods, supplies, inventories, or services or the requirement that such goods, supplies, inventories, or services comply with specifications and standards prescribed by the franchisor does not constitute designation of a source nor does a reasonable right of the franchisor to disapprove a supplier constitute a designation.
This subdivision does not apply to the principal goods, supplies, inventories, or services manufactured or trademarked by the franchisor.
Source: Item 23 — RECEIPTS (FDD pages 52–140)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, the Indiana Rider modifies the franchise agreement to comply with the Indiana Acts, which include the Indiana Franchise Act and the Indiana Deceptive Franchise Practices Act. Specifically, the rider addresses the purchase of goods, supplies, inventories, or services.
The rider states that franchisees are not required to purchase exclusively from Desi District or its designated sources if goods, supplies, inventories, or services of comparable quality are available from other sources. However, Desi District can publish a list of approved suppliers and require that goods meet their specifications and standards.
Importantly, the Indiana Rider clarifies that Desi District's reasonable right to disapprove a supplier does not constitute a designation of a source. This means Desi District retains some authority to reject suppliers that do not meet their standards, even if comparable goods are available elsewhere. This provision does not apply to principal goods, supplies, inventories, or services manufactured or trademarked by Desi District.