Does Golden Krust Caribbean Restaurant collect any revenue from sales made to franchisees?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
iers by the manufacturer are equivalent to market prices.
Golden Krust Caribbean Bakery, Inc. does not charge the same prices to individual/entities who are not franchisees. In 2023, the books and records of Golden Krust Caribbean Bakery, Inc., showed total sales of food products and seasonings to franchisees (including sales to distributors who re-sold to franchisees) were approximately $13,422,762.20. We do not collect any revenue from sales made to franchisees. Certain franchised units operated by employees of ours or of related entities and family members (and their heirs) who are shareholders of ours or of our related entities do not pay the same prices for food products and seasonings purchased from Golden Krust Caribbean Bakery, Inc.
Additionally, you are obligated to purchase all other food or restaurant products from sources approved or designated by us. Equipment and fixtures for your restaurant must meet our minimum standards and specifications. Our standards and specifications may impose minimum requirements for delivery, performance, design and appearance. We will notify you in our Brand Standards Manual or other communications of our standards and specifications and/or names of approved suppliers.
We do not provide material benefits to our franchisees based on their use of approved sources or their purchase of particular products or services.
Except as described above, neither Golden Krust nor its affiliates currently derive revenue or other material consideration as a result of required purchases or leases. There currently are no purchasing or distribution cooperatives. Golden Krust currently has the right at some point in the future to negotiate purchase arrangements with suppliers for the benefit of franchisees, and/or to derive revenue or other material consideration as a result of required purchases or leases, but intends to do so only if there will be a net c
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 15–16)
What This Means (2024 FDD)
According to Golden Krust Caribbean Restaurant's 2024 Franchise Disclosure Document, Golden Krust Caribbean Bakery, Inc. does not collect revenue from sales made directly to franchisees. However, in 2023, sales of food products and seasonings to franchisees (including sales to distributors who re-sold to franchisees) totaled approximately $13,422,762.20. It is important to note that certain franchised units operated by employees, related entities, family members, or shareholders may not pay the same prices for food products and seasonings purchased from Golden Krust Caribbean Bakery, Inc.
While Golden Krust Caribbean Restaurant states that they do not currently derive revenue from required purchases or leases, they retain the right to negotiate purchase arrangements with suppliers in the future, potentially generating revenue if it results in net cost savings for franchisees. Franchisees are required to purchase a significant portion of their supplies from approved or designated suppliers, with an estimated 75% to 90% of total purchases and leases being subject to these restrictions. This includes Jamaican patties, jerk seasonings, jerk sauce, jerk chicken, and most breads, cakes, and baked goods, which must be purchased from designated suppliers, including Golden Krust Caribbean Bakery, Inc.
Several shareholders and board members have financial interests in companies that supply products to Golden Krust Caribbean Restaurant franchisees. In 2023, IJBR had revenue of $1,730,000, GK SDI had revenue of $703,673.81, and GK NW had revenue of $334,353.29 based on sales to franchisees. The price franchisees pay for food products from Golden Krust Caribbean Bakery, Inc. varies depending on the restaurant's location and the quantities purchased. Prospective franchisees should consider these relationships and purchasing requirements as part of their due diligence, understanding that a substantial portion of their expenses will be directed through channels that may benefit the franchisor or its affiliates.