For a Flowerama franchise, is there a requirement to purchase or lease goods, merchandise, services, supplies, fixtures, equipment, and inventory from designated or approved suppliers?
Flowerama Franchise · 2024 FDDAnswer from 2024 FDD Document
nd business acumen; local economic conditions; the local market for your products and services; the prevailing wage rate; competition and the sales level reached at the Center during this initial period.
ITEM 8 RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES
You must purchase or lease all goods, merchandise, services, supplies, fixtures, equipment (which may include computer hardware and software), and inventory for the Center from designated or approved suppliers according to our standards and specifications. We will provide you with a list of our designated and approved suppliers after you sign your Franchise Agreement. You must purchase specific products and services we require you to obtain from specific suppliers, which may include us or our affiliates.
You must purchase goods we designate from BloomNet, through its site, BloomNet.net and/or from Napco as we require. BloomNet and Napco will generally be the only approved supplier of these products. As a member of the BloomNet Network, you must pay BloomNet membership rates and enter into a BloomNet Membership Agreement with BloomNet. You must also enter into a BloomNet Technologies Systems Agreement with BloomNet to obtain a limited license to use certain software, documentation and copyrighted content that comprise BloomLink or other software systems designated to fulfill floral orders and other functions at your Center. BloomNet or its designee are the only approved source of supply of BloomLink . We also reserve the right to require you to use BloomNet or certain wire services and/or to restrict the wire services you may use. You may also purchase certain confection products from Cheryl, Popcorn, Design , CardIsle and HDO to fulfill certain types of orders from 800-Flowers.
With these exceptions, neither we nor any persons affiliated with us are the only approved suppliers of any products or services, and you do not have to purchase or lease any other items from us or our subsidiaries or affiliates. BloomNet derives revenue from the sale of designated products, from the licensing of the BloomNet Technologies Systems to our franchisees and from the BloomNet membership rates they pay, and Napco derives revenues from the sale of designated products to our franchisees.
BloomNet's (including Napco) total revenues were $107,801,600 during its fiscal year ended June 30, 2024. BloomNet's (including Napco) total revenues from the sale of designated products to Flowerama franchisees during this period were $312,866 or 0.29% of its total revenues. BloomNet's total revenues from its software licensing with Flowerama franchisees during this period were $166,377 or 0.15% of its total revenues. BloomNet's total revenues from membership rates paid by Flowerama franchisees during this period were $105,986 or 0.10% of its total revenues. BloomNet's total revenues from its sale of designated wholesale products paid by Flowerama franchisees during this period were $40,504 or 0.04% of its total revenues. The sources of this information are the financial books and records of BloomNet.
Our parent company, 1-800-Flowers, owns us, BloomNet and Napco, which are approved suppliers. James F. McCann, Christopher McCann, Jonathan Feldman, William Shea, Michael R. Manley, Ted Nelson, Brian McGee, Stephen Lenzovich, and Camilo Escobar each own an interest in 1-800-Flowers.
You may obtain materials and supplies, as well as initial equipment, fixtures and inventory, from any supplier, provided that the items conform to reasonable standards maintained in our company-owned stores or prescribed by us in the operations manual.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 29–32)
What This Means (2024 FDD)
According to Flowerama's 2024 Franchise Disclosure Document, franchisees are generally required to purchase or lease goods, merchandise, services, supplies, fixtures, equipment, and inventory from designated or approved suppliers. Flowerama will provide a list of these suppliers after the Franchise Agreement is signed. Franchisees must purchase specific products and services from specific suppliers, which may include Flowerama or its affiliates.
Specifically, Flowerama franchisees must purchase designated goods from BloomNet, through its site, BloomNet.net, and/or from Napco. BloomNet and Napco will generally be the only approved suppliers of these products. As a member of the BloomNet Network, franchisees must pay BloomNet membership rates and enter into a BloomNet Membership Agreement with BloomNet. Franchisees must also enter into a BloomNet Technologies Systems Agreement with BloomNet to obtain a limited license to use certain software, documentation and copyrighted content that comprise BloomLink or other software systems designated to fulfill floral orders and other functions at the Flowerama Center. BloomNet or its designee are the only approved source of supply of BloomLink. Flowerama also reserves the right to require franchisees to use BloomNet or certain wire services and/or to restrict the wire services they may use. Franchisees may also purchase certain confection products from Cheryl, Popcorn, Design, CardIsle and HDO to fulfill certain types of orders from 800-Flowers.
With the exceptions of BloomNet and Napco, neither Flowerama nor any persons affiliated with them are the only approved suppliers of any products or services, and franchisees do not have to purchase or lease any other items from Flowerama or its subsidiaries or affiliates. The FDD states that BloomNet's total revenues were $107,801,600 during its fiscal year ended June 30, 2024. BloomNet's total revenues from the sale of designated products to Flowerama franchisees during this period were $312,866 or 0.29% of its total revenues. BloomNet's total revenues from its software licensing with Flowerama franchisees during this period were $166,377 or 0.15% of its total revenues. BloomNet's total revenues from membership rates paid by Flowerama franchisees during this period were $105,986 or 0.10% of its total revenues. BloomNet's total revenues from its sale of designated wholesale products paid by Flowerama franchisees during this period were $40,504 or 0.04% of its total revenues.
Flowerama estimates that required purchases or leases will range from 75% to 80% of the total initial investment and 30% to 40% of annual operating expenses. If co-branding an existing business, Flowerama estimates that required purchases or leases will range from 15% to 21% of the total initial investment and 28% to 34% of annual operating expenses. If a franchisee wishes to purchase an item from a supplier that has not yet been approved by Flowerama, they must make a written request to Flowerama for approval of the proposed item or supplier. Flowerama will test and evaluate recommended suppliers at the franchisee's expense and approve or disapprove the suppliers with reasonable promptness, not to exceed 90 days based upon tests and evaluations of the products or services. Franchisees may not use a recommended supplier before Flowerama approves the supplier in writing.