Can Dryer Vent Squad designate itself or its affiliates as exclusive suppliers?
Dryer_Vent_Squad Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
We and/or our affiliates may receive rebates, payments and other material benefits from suppliers based on franchisee purchases and we reserve the right to institute and expand rebate programs in the future. As of December 31, 2021, we have not received revenue from suppliers of franchisee purchases of source restricted products or services.
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 75% of your total purchases and leases in establishing the Franchised Business and approximately 40% of the on-going operating expenses of the Franchised Business.
You must purchase the System Supplies, as designated by us, from us, our affiliates, and/or our designated suppliers.
You must purchase all branded marketing materials from either us or our designated exclusive supplier.
You must use our designated supplier and vendor for credit card processing which may be integrated with the point of sale system that we designate.
If we elect to offer Contact Center Services or designated a third party supplier to provide Contact Services, you will be required to exclusively use the Contact Center Services that we designate.
You will not receive any material benefits for using designated or approved suppliers.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 24–28)
What This Means (2024 FDD)
According to Dryer Vent Squad's 2024 Franchise Disclosure Document, Dryer Vent Squad has the right to designate itself or its affiliates as exclusive suppliers for goods and services. This means that Dryer Vent Squad franchisees may be required to purchase certain items, such as system supplies and branded marketing materials, directly from Dryer Vent Squad or its approved affiliates. This applies regardless of whether there are other competing suppliers available.
This arrangement allows Dryer Vent Squad to maintain quality control and standardization across all franchise locations. While this ensures consistency, it also limits a franchisee's ability to shop around for potentially lower prices or better terms from alternative suppliers. Franchisees are required to use Dryer Vent Squad's designated supplier for credit card processing. If Dryer Vent Squad elects to offer Contact Center Services or designates a third party supplier to provide Contact Services, franchisees will be required to exclusively use the Contact Center Services that Dryer Vent Squad designates.
The FDD also states that Dryer Vent Squad and/or its affiliates may receive rebates, payments, or other benefits from suppliers based on franchisee purchases, and they reserve the right to institute and expand rebate programs in the future. As of December 31, 2021, Dryer Vent Squad had not received revenue from suppliers of franchisee purchases of source restricted products or services. Franchisees will not receive any material benefits for using Dryer Vent Squad's designated or approved suppliers.
Prospective franchisees should be aware that approximately 75% of their total purchases and leases in establishing the Franchised Business and approximately 40% of the on-going operating expenses of the Franchised Business will be from designated exclusive suppliers. If a franchisee wishes to use a non-approved supplier, they must submit a written request for approval, which may include a supplier review and testing fee, samples for testing, and facility inspections. Dryer Vent Squad has the discretion to withhold approval based on factors such as the supplier's ability to meet standards, quality control, and whether the approval advances the overall interests of the Dryer Vent Squad system.