Is a Gold Star franchisee obligated to purchase all food supplies from approved suppliers?

y materials, supplies, food items, sauces, or services or any other items provided or promoted by the COMPANY and as distributed or provided by FRANCHISEE under the name GOLD STAR CHILI or any other Mark, and FRANCHISEE will indemnify, hold harmless and insure the COMPANY against any liability, loss or expense (including reasonable attorney fees) arising out of FRANCHISEE's use of the Marks or the System.

7. PURCHASE OF INGREDIENTS, SUPPLIES AND MATERIALS.

• 7.1 Proprietary Products. In order to establish uniformity of taste and quality of the COMPANY's chili products, the COMPANY has developed and will continue to develop secret blends of spices and flavorings, its own secret chili Product and related items as designated by the COMPANY in the Manual or otherwise in writing from time to time (collectively, the "Proprietary Products"), which must be purchased by Restaurant franchisees only from the COMPANY or suppliers specifically appointed by the COMPANY for use by Restaurant franchisees. FRANCHISEE agrees to purchase from the COMPANY or its designees all of the Store's requirements for Proprietary Products, as shall be specified from time to time in the Manual or otherwise in writing by the COMPANY, at the COMPANY's or such designee's prices in effect from time to time, and on such shipping, payment, delivery, warranty and other terms as the COMPANY (or its designees, as applicable) may determine in its sole discretion from time to time, and to pay for all such Proprietary Products purchased in accordance with such terms and conditions.
• 7.2 Approved Suppliers. FRANCHISEE shall purchase all food supplies, ingredients and equipment used to make Products (including Proprietary Products), any items used in the construction of the Retail Location or operation of the Business, or otherwise offered for sale or used in the Store and not required to be purchased from the COMPANY or its designees, solely from sources who demonstrate, to the continuing satisfaction of the COMPANY, the ability to meet the COMPANY's then current standards and specifications for such items, who possess adequate quality controls and capacity to supply FRANCHISEE's needs promptly and reliably, who have been approved in writing by the COMPANY as a source of such item prior to any purchases by FRANCHISEE from such supplier and who have not thereafter been disapproved. FRANCHISEE acknowledges that the COMPANY may from time to time receive rebates or discounts from such suppliers.

• 7.3 Alternative Suppliers. If FRANCHISEE desires to purchase from a source that is not on the COMPANY's then current approved supplier list for the item desired to be purchased, or to obtain approval to offer merchandise or services or use items that are not on the COMPANY's then current list of approved Products, FRANCHISEE shall submit to the COMPANY a written request for approval in accordance with the procedures then prescribed by the COMPANY for submission of requests for approval of products and suppliers. The COMPANY shall have the right to require that its representatives be permitted to inspect the source's facilities, that samples from the source be submitted to the COMPANY or its designee for testing and evaluation and that FRANCHISEE pay the COMPANY a charge not to exceed the reasonable cost of the inspection and the actual cost of testing or other evaluation. The COMPANY shall notify FRANCHISEE in writing within a reasonable time, not to exceed sixty (60) days, after receipt of FRANCHISEE's request and samples, whether such approval is granted. The COMPANY reserves the right to reinspect facilities and items from time to time.

Source: Item 23 — Receipts (FDD pages 53–163)