Does the requirement that goods comply with specifications prescribed by Desi District constitute designation of a source under the Indiana Acts?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
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 requirement for goods, supplies, inventories, or services to comply with specifications and standards prescribed by Desi District does not constitute designation of a source under the Indiana Acts. This falls under modifications to ensure compliance with the Indiana Franchise Act and the Indiana Deceptive Franchise Practices Act.
This means that while Desi District can set standards for the goods and services used in the franchise, it cannot mandate that franchisees purchase exclusively from specific, designated sources if comparable quality goods are available elsewhere. The purpose of this modification is to ensure fair competition and prevent Desi District from unduly restricting the franchisee's purchasing options.
However, this provision does not apply to principal goods, supplies, inventories, or services manufactured or trademarked by Desi District. Therefore, Desi District can require franchisees to purchase trademarked or manufactured goods directly from them, ensuring brand consistency and quality control for core products.