Can Fly To Fit implement a centralized purchasing system?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
- 8.4 Purchasing. Fly To Fit Franchise may negotiate prices and terms with vendors on behalf of the System.
Fly To Fit Franchise may receive rebates, payments or other consideration from vendors in connection with purchases by franchisees.
Fly To Fit Franchise has the right (but not the obligation) to collect payments from Franchisee on behalf of a vendor and remit the payments to the vendor and to impose a reasonable markup or charge for administering the payment program.
Fly To Fit Franchise may implement a centralized purchasing system.
Fly To Fit Franchise may establish a purchasing cooperative and require Franchisee to join and participate in the purchasing cooperative on such terms and conditions as Fly To Fit Franchise may determine.
- 8.5 No Liability of Franchisor. Fly To Fit Franchise shall not have any liability to Franchisee for any claim or loss related to any product provided or service performed by any Approved Vendor or Required Vendor, including without limitation defects, delays, or unavailability of products or services.
Source: Item 22 — CONTRACTS (FDD page 44)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, Fly To Fit has the authority to implement a centralized purchasing system for the franchise network. This means Fly To Fit can establish a system where franchisees are required to purchase goods and services through a central channel managed by Fly To Fit. Fly To Fit also has the option to establish a purchasing cooperative that franchisees would be required to join.
Fly To Fit may negotiate prices and terms with vendors on behalf of the entire Fly To Fit system. Additionally, Fly To Fit is allowed to receive rebates, payments, or other forms of consideration from vendors based on the purchases made by franchisees. Fly To Fit also has the right to collect payments from franchisees on behalf of a vendor and remit those payments, potentially adding a markup or charge for administering this payment program.
However, Fly To Fit assumes no liability for any claims or losses related to products or services provided by approved vendors, including issues like defects, delays, or unavailability. This means that while Fly To Fit can mandate the purchasing system, the individual franchisee bears the risk associated with the vendor's performance. This is a common practice in franchising, where franchisors try to leverage bulk purchasing power while shifting vendor-related risks to franchisees.