Does Face Foundrie receive payments from suppliers as a condition of approving them?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
onies you pay to us will include a profit for us.
Rebates and Allowances
In addition to the above, we and our affiliates have the right to receive payments or other benefits like rebates, discounts and allowances from authorized suppliers based upon their dealings with you and other franchisees and we may use the monies we receive without restriction for any purpose we deem appropriate or necessary. We do and reserve the right to receive payments from authorized suppliers that we retain as profit related to their dealings with our franchisees and the System, and suppliers may pay us based upon the quantities of products the System purchases from them. These payments will usually be based upon an amount per unit or percentage rebate, and generally range from 2% to 10% of the purchases you make from the vendor. We may receive payments from a supplier as a condition of our approval of that supplier. We do not provide any material benefits to you, such as the grant of additional franchises and/or territories, based on your use of designated or approved suppliers. There are currently no purchasing or distribution cooperatives in our System. We have negotiated price terms with some suppliers. In addition, in the future various vendors and suppliers may contribute to the cost of any annual franchise convention for the System through rebates, contributions or purchasing booths at the convention. We negotiate supply arrangements with suppliers for the benefit of franchisees, and may continue to do so in the future.
In our last fiscal year, which ended December 31, 2024, we did not receive any revenue as a result of franchisee purchases of goods or services. Our affiliate, Face Foundrié Products L.L.C., which sold goods to franchisees and to a supplier that in turn sold them to franchisees, received $305,974.74 in our last fiscal year as a result of franchisee purchases of goods or services.
Other than our affiliate, there are currently no approved suppliers in which any of our officers own an interest.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 27–31)
What This Means (2025 FDD)
According to Face Foundrie's 2025 Franchise Disclosure Document, Face Foundrie has the right to receive payments from suppliers as a condition of approving them. These payments are related to the suppliers' dealings with Face Foundrie franchisees and the overall Face Foundrie system. Face Foundrie retains these payments as profit. The payments from suppliers are typically based on a per-unit amount or a percentage rebate, generally ranging from 2% to 10% of the franchisee's purchases from the vendor.
For a prospective franchisee, this means that Face Foundrie may profit from the franchisee's purchases from approved suppliers. While this is a common practice in franchising, it's important to note that these payments are not passed on to the franchisee in the form of benefits like additional franchises or territories. Face Foundrie uses these monies without restriction for any purpose they deem appropriate or necessary.
Furthermore, if a franchisee wishes to use a supplier that is not already approved, the proposed supplier or the franchisee must pay a fee to Face Foundrie to cover the costs of evaluation, testing, and inspections. This fee is the greater of $2,500 or the actual reasonable cost of the evaluation. This cost could vary based on the extent of testing and inspections required to assess the supplier's products. Face Foundrie will then notify the franchisee of the approval or disapproval, generally within 90 days.