Can Fly To Fit require a franchisee to purchase or lease Inputs from specific sources?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
- 8.1 Generally. Franchisee shall acquire all Inputs required by Fly To Fit Franchise from time to time in accordance with System Standards.
Fly To Fit Franchise may require Franchisee to purchase or lease any Inputs from Fly To Fit Franchise, Fly To Fit Franchise's designee, Required Vendors, Approved Vendors, and/or under Fly To Fit Franchise's specifications.
Fly To Fit Franchise may change any such requirement or change the status of any vendor.
To make such requirement or change effective, Fly To Fit Franchise shall issue the appropriate System Standards.
- 8.2 Alternate Vendor Approval. If Fly To Fit Franchise requires Franchisee to purchase a particular Input only from an Approved Vendor or Required Vendor, and Franchisee desires to purchase the Input from another vendor, then Franchisee must submit a written request for approval and any information, specifications and/or samples requested by Fly To Fit Franchise.
Fly To Fit Franchise may condition its approval on such criteria as Fly To Fit Franchise deems appropriate, which may include evaluations of the vendor's capacity, quality, financial stability, reputation, and reliability; inspections; product testing, and performance reviews.
Fly To Fit Franchise will provide Franchisee with written notification of the approval or disapproval of any proposed new vendor within 30 days after receipt of Franchisee's request.
- 8.3 Alternate Input Approval. If Fly To Fit Franchise requires Franchisee to purchase a particular Input, and Franchisee desires to purchase an alternate to the Input, then Franchisee must submit a written request for approval and any information, specifications and/or samples requested by Fly To Fit Franchise.
Fly To Fit Franchise will provide Franchisee with written notification of the approval or disapproval of any proposed alternate Input within 30 days after receipt of Franchisee's request.
- 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 mandate that franchisees acquire or lease required "Inputs" from specific sources. These sources can include Fly To Fit itself, its designees, "Required Vendors," "Approved Vendors," or according to Fly To Fit's specific requirements. Fly To Fit also retains the right to modify these requirements or change the approved vendor list, which will be communicated through updated System Standards.
For a prospective franchisee, this means they may not have complete autonomy in choosing suppliers for essential business items. Fly To Fit aims to maintain consistency and quality across all franchise locations by controlling the supply chain. This can impact a franchisee's operational costs and potentially limit their ability to negotiate better deals with alternative vendors. However, Fly To Fit states that it may negotiate prices and terms with vendors on behalf of the entire system, potentially leveraging bulk purchasing power to benefit franchisees.
Fly To Fit also outlines a process for franchisees to request approval of alternative vendors or "Inputs" if they wish to deviate from the mandated sources. The franchisee must submit a written request with all necessary information, specifications, and samples for Fly To Fit's review. Fly To Fit will then provide a written notification of approval or disapproval within 30 days of receiving the request. However, Fly To Fit maintains the right to set the criteria for vendor approval, including evaluations of the vendor's capacity, quality, financial stability, reputation, and reliability.
It's important to note that Fly To Fit states it will not be liable for any claims or losses related to products or services provided by Approved or Required Vendors, including issues such as defects, delays, or unavailability. Additionally, Fly To Fit may receive rebates or other consideration from vendors based on franchisee purchases and may implement a centralized purchasing system or establish a purchasing cooperative that franchisees are required to join.