Can Hawaiian Bros Island Grill and its affiliates profit from sales of goods or services to a Hawaiian Bros Island Grill franchisee?
Hawaiian_Bros_Island_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee will (i) comply with and adhere to the Standards, policies and procedures set forth in the Operations Manual, as revised and supplemented from time to time, (ii) follow Company procedures in the storage, preparation, presentation and dispensing of authorized menu items, and other authorized Hawaiian Bros Restaurant merchandise and the acquisition of items from approved suppliers, (iii) purchase and use fresh, processed and prepackaged ingredients that satisfy or exceed the minimum grade or quality Standards Company from time to time specifies, (iv) purchase from Company or a source Company designates and exclusively use Hawaiian Bros Island Grill brand sauces and other proprietary products specially produced for the Hawaiian Bros Island Grill restaurant chain, and (v) purchase inventory, supplies, equipment, merchandise and technology services only from suppliers Company designates or approves from time to time, the number of which may be limited by Company.
Franchisee acknowledges that Company and/or a Company Affiliate may be a supplier of approved or required inventory, supplies, equipment, merchandise or technology services and Company or one of its Affiliates may be the only approved supplier with respect to certain of such items, some of which may be required.
Company reserves the right to prohibit or restrict Franchisee's use of non-required service providers when Company determines, in its sole discretion, that they demonstrate meaningful risks to the System.
Source: Item 23 — RECEIPTS (FDD pages 77–262)
What This Means (2025 FDD)
According to the 2025 Hawaiian Bros Island Grill Franchise Disclosure Document, Hawaiian Bros Island Grill or its affiliates may act as a supplier of approved or required inventory, supplies, equipment, merchandise, or technology services to franchisees. In some instances, Hawaiian Bros Island Grill or one of its affiliates may be the only approved supplier for certain items, some of which may be required for the franchisee to purchase. This means that Hawaiian Bros Island Grill and its affiliates can potentially profit from these sales to franchisees.
This arrangement is common in franchising, as it allows the franchisor to maintain quality control and brand consistency across all locations. However, it also means that franchisees may be required to purchase goods and services from Hawaiian Bros Island Grill or its affiliates, even if they could find them cheaper elsewhere. This could impact a franchisee's profitability, especially if the prices charged by Hawaiian Bros Island Grill or its affiliates are higher than market rates.
Hawaiian Bros Island Grill also reserves the right to prohibit or restrict a franchisee's use of non-required service providers if they pose risks to the Hawaiian Bros Island Grill system. This gives Hawaiian Bros Island Grill significant control over the vendors a franchisee can use, even for services that are not explicitly required. Prospective franchisees should carefully consider these requirements and their potential impact on their business's expenses and operational flexibility. Understanding the specific items that must be purchased from Hawaiian Bros Island Grill or its affiliates, and comparing those costs to alternative suppliers, is a crucial part of due diligence.