Can Fitstop establish strategic alliances or preferred vendor programs with suppliers?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
We may, when appropriate, negotiate purchase arrangements, including price terms, with designated and Approved Suppliers on behalf of the System. We may establish strategic alliances or preferred vendor programs with suppliers that are willing to supply some products, equipment, or services to some or all the System Businesses. If we do establish those types of alliances or programs, we may: (i) limit the number of approved suppliers with whom you may deal; (ii) designate sources that you must use for some or all products, equipment and services; and (iii) refuse to approve proposals from franchisees to add new suppliers if we believe that approval would not be in the best interests of the System.
We and/or our affiliates may receive payments or other compensation from Approved Suppliers or any other suppliers on account of these suppliers' dealings with us, you, or other Franchised Businesses in the System, such as rebates, commissions or other forms of compensation. We may use any amounts that we receive from suppliers for any purpose that we deem appropriate. We and/or our affiliates may negotiate supply contracts with our suppliers under which we are able to purchase products, equipment, supplies, services and other items at a price that will benefit us and our franchisees. As noted above in this Item, neither we nor our affiliate(s) derived any rebates/consideration from any third-party suppliers or providers – or any other revenue – over our respective past fiscal year(s) ending December 31, 2023.
We do not currently have any purchasing or distributing cooperatives as of the Issue Date, but we reserve the right to create such cooperatives in the future.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 19–23)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, Fitstop has the ability to establish strategic alliances or preferred vendor programs with suppliers who are willing to supply products, equipment, or services to some or all of the Fitstop System Businesses. If Fitstop establishes these types of alliances or programs, they may limit the number of approved suppliers a franchisee can deal with, designate sources that franchisees must use for some or all products, equipment, and services, and refuse to approve proposals from franchisees to add new suppliers if they believe that approval would not be in the best interests of the System.
Fitstop and/or its affiliates may receive payments or other compensation from Approved Suppliers or any other suppliers due to these suppliers' dealings with Fitstop, the franchisee, or other Franchised Businesses in the System. This compensation can take the form of rebates, commissions, or other forms of compensation. Fitstop may use any amounts that they receive from suppliers for any purpose that they deem appropriate.
Fitstop and/or its affiliates may negotiate supply contracts with their suppliers under which they are able to purchase products, equipment, supplies, services, and other items at a price that will benefit Fitstop and its franchisees. As of the fiscal year ending December 31, 2023, neither Fitstop nor its affiliates derived any rebates/consideration from any third-party suppliers or providers – or any other revenue.
Fitstop does not currently have any purchasing or distributing cooperatives as of the Issue Date, but they reserve the right to create such cooperatives in the future. This gives Fitstop significant control over the supply chain and the potential to benefit financially from supplier relationships, which could impact a franchisee's costs and sourcing options.