Can the Hck Hot Chicken franchisor reject an order placed by a franchisee?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
he proposed Supplier, a written statement of approval with respect to such Supplier, such Supplier shall be deemed disapproved as a Supplier of the authorized Non-Proprietary Products described in such notice. Nothing in this Section shall require Franchisor to approve any Supplier, and without limiting Franchisor's right to approve or disapprove a Supplier in its discretion, Franchisee acknowledges that it is generally disadvantageous to the system from a cost and service basis to have more than one Supplier in any given market area and that among the other factors Franchisor may consider in deciding whether to approve a proposed Supplier, it may consider the effect that such approval may have on the ability of Franchisor and its Franchisees to obtain the lowest distribution costs and on the quality and uniformity of products offered system-wide. Without limiting the foregoing, Franchisor may disapprove a proposed Supplier, if in Franchisor's opinion, the approval of the proposed Supplier would disrupt or adversely impact Franchisor's national or regional distributional arrangements. Franchisor may also determine that certain Non-Proprietary Products (e.g. beverages) shall be limited to a designated brand or brands set by Franchisor which brand(s) it may change from time to time. Franchisor may revoke its approval upon the Supplier's failure to continue to meet any of Franchisor's criteria. Franchisee agrees that at such times that Franchisor establishes a regional purchasing program for any of the raw materials used in the preparation of Authorized Products or other Non-Proprietary Products used in the operation of the Franchised Restaurant, which may benefit Franchisee by reduced price, lower labor costs, production of improved products, increased reliability in supply, improved distribution, raw material cost control (establishment of consistent pricing for reasonable periods to avoid market fluctuations), improved operations by Franchisee or other tangible benefits to Franchisee, Franchisee will participate in such purchasing program in accordance with the terms of such program.
- 9.2.4 As a further condition of its approval, Franchisor may require a Supplier to agree in writing: (i) to provide from time to time upon Franchisor's request free samples of any Non-Proprietary Product it intends to supply to Franchisee, (ii) to faithfully comply with Franchisor's specifications for applicable Non-Proprietary Products sold by it, (iii) to sell any Non-Proprietary Product bearing the Franchisor's Marks only to franchisees and Franchisees of Franchisor and only pursuant to a trademark license agreement in form prescribed by Franchisor, (iv) to provide to Franchisor duplicate purchase invoices for Franchisor's records and inspection purposes and (v) to otherwise comply with Franchisor's reasonable requests.
- 9.2.5 Franchisor will not charge Franchisee for reviewing Franchisee's first request in any service or product category for approval of a supplier, however Franchisor reserves the right to charge a fee for the cost of inspection and review for each additional submission in the same category.
- 9.2.6 Franchisee shall at all times remain current and fully comply and perform each of its obligations to its landlord, vendors, and Suppliers.
9.3 Purchases from Franchisor or its Affiliates.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to Hck Hot Chicken's 2025 Franchise Disclosure Document, the franchisor has some discretion regarding purchases from both approved suppliers and directly from the franchisor or its affiliates.
Specifically, Hck Hot Chicken is not required to approve any supplier proposed by a franchisee. The franchisor may disapprove a supplier if it believes the approval would disrupt national or regional distribution arrangements or negatively impact the ability to obtain the lowest distribution costs and maintain product quality and uniformity across the system. The franchisor can also designate specific brands for certain non-proprietary products like beverages, which limits a franchisee's choice.
Furthermore, if a franchisee is purchasing goods, products, and supplies directly from Hck Hot Chicken or its affiliates, these purchases must be made according to the franchisor's purchase order format and policies outlined in the Hck Hot Chicken Brand Standards Manual. The franchisor can change prices, delivery terms, and other sales terms with prior written notice, ensuring these prices are consistent with those charged to similarly situated franchisees, excluding costs like shipping and insurance. The franchisor also has the right to discontinue the sale of any goods or services if it deems continued sale unfeasible, unprofitable, or undesirable. The franchisor is not liable for delays or unavailability of merchandise due to issues beyond its control, such as product shortages or transportation delays.
In summary, while the FDD does not explicitly state that Hck Hot Chicken can 'reject an order', it outlines conditions under which a franchisee's purchasing options are limited or subject to the franchisor's approval and potential discontinuation of supply. This framework allows Hck Hot Chicken to influence and potentially control aspects of a franchisee's orders through supplier approvals, designated brands, and direct purchasing terms.