Does the Indiana Rider's modification regarding exclusive purchasing apply to goods trademarked by Desi District?
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 Indiana law. Specifically, it addresses exclusive purchasing requirements. The standard franchise agreement might require a franchisee to purchase goods, supplies, inventories, or services exclusively from Desi District or its designated sources. However, the Indiana Rider modifies this, stating that franchisees can purchase these items from other sources if they are of comparable quality.
However, this modification does not apply to all goods. The Indiana Rider explicitly states that the modification regarding purchasing from alternative sources "does not apply to the principal goods, supplies, inventories, or services manufactured or trademarked by the franchisor." This means that if Desi District manufactures or trademarks certain goods, supplies, inventories, or services, Indiana franchisees are still required to purchase those items directly from Desi District or its designated sources, regardless of whether comparable quality items are available elsewhere.
In practical terms, this means that an Indiana Desi District franchisee must carefully identify which products are trademarked or manufactured by Desi District. For those items, the franchisee must adhere to the franchisor's designated supply chain. For other goods not trademarked or manufactured by Desi District, the franchisee has the option to seek alternative suppliers, potentially reducing costs if comparable quality items can be found at a lower price. However, it is important to ensure that any alternative supplier meets Desi District's specifications and standards to avoid any breach of the franchise agreement.