Can Ella Cafe contact suppliers to obtain information about a franchisee's purchases?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisor may approve one or more suppliers for any goods or materials and may approve a supplier only as to certain goods or materials. Franchisor may concentrate purchases with one or more suppliers or distributors to obtain lower prices and/or the best advertising support and/or services for any group of Coffee Houses or any other group of Coffee House franchised or operated
by Franchisor or its Affiliates. Approval of a supplier may be conditioned on requirements relating to the frequency of delivery, reporting capabilities, standards of service, including prompt attention to complaints, or other criteria, and concentration of purchases, as set forth above, and may be temporary pending a further evaluation of such supplier by Franchisor.
If Franchisee proposes to purchase from an unapproved source, Franchisee must submit to Franchisor a written request for such approval, or must request the supplier to submit a written request on its own behalf. Franchisor reserves the right to require, as a condition of its approval, that its representatives be permitted to inspect the supplier's facilities, and that such information, specifications, and samples as Franchisor reasonably requires be delivered to Franchisor and/or to an independent, certified laboratory designated by Franchisor for testing prior to granting approval. A charge not to exceed the reasonable cost of the inspection and the actual cost of the test must be paid by Franchisee. Franchisor will notify Franchisee within 60 days of Franchisee's request as to whether or not Franchisee is authorized to purchase such products from that supplier. Franchisor reserves the right, at its option, to re-inspect the facilities and products of any such approved supplier and to revoke its approval of any supplier upon the suppliers' failure to meet Franchisor's criteria for quality and reliability.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2024 FDD)
Based on the 2024 Franchise Disclosure Document, Ella Cafe has the right to approve suppliers and may require specific standards of service and reporting capabilities as a condition of approval. Ella Cafe may concentrate purchases with certain suppliers to obtain better pricing, advertising support, or services for its franchisees.
If a franchisee proposes using an unapproved supplier, they must seek written approval from Ella Cafe, or the supplier must do so on their behalf. As part of the approval process, Ella Cafe can inspect the supplier's facilities and request information, specifications, and samples for testing. The franchisee bears the cost of these inspections and tests. Ella Cafe will then notify the franchisee of its decision within 60 days.
Ella Cafe retains the right to re-inspect approved suppliers and revoke approval if they fail to meet the brand's quality and reliability standards. While the FDD outlines Ella Cafe's ability to approve and monitor suppliers, it does not explicitly state whether Ella Cafe can directly contact suppliers to obtain information about a franchisee's purchases. A prospective franchisee should clarify this point with Ella Cafe to understand the extent of the franchisor's access to their purchase information.