Considering the restrictions on suppliers in Item 8, what obligations does a Healthsource Chiropractic franchisee have regarding purchasing inventory as detailed in Item 9?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
UCTS AND SERVICES**
Lease and Purchase Specifications and Requirements
You must lease or purchase your Clinic location, leasehold improvements, computer and office equipment (including cash registers and computer hardware and software), x-ray equipment, fixtures, furnishings and decor, signage, insurance, inventory (including, without limitation, dietary supplements), clothing, branding, advertising and marketing materials and services, grand opening kit, training, supplies, programs and other items and services under our specifications as set forth in our Operations Manual for Clinics – see Items 7 and 11. These specifications include standards for appearance, delivery, performance, quality control, and/or design.
You must lease or purchase your leasehold improvements, x-ray equipment, computer and billing system, equipment, inventory, marketing materials, supplies, services, products, and other items only from suppliers or designees approved by us. Our Operations Manual lists our approved suppliers. There may be items for which we or our affiliates are approved suppliers (see below).
You must obtain and maintain, at your own expense, the insurance coverage that we periodically require and satisfy other insurance-related obligations. You must purchase (1) comprehensive commercial general liability and motor vehicle liability insurance containing minimum liability coverage of not less than $1,000,000 per occurrence and $3,000,000 in the aggregate, (2) worker's compensation and employer's liability insurance as required by law, with limits equal to or in excess of those required by law, (3) professional liability (malpractice) insurance, for each doctor practicing in your Franchise business, having limits of not less than $1,000,000 per occurrence and $3,000,000 in the aggregate and (4) any other insurance required by applicable law, rule, regulation, ordinance or licensing requirements. Deductibles must be in reasonable amounts and are subject to review and written approval by us. Your commercial general liability insurance policy must be an "occurrence" policy.
What This Means (2025 FDD)
According to the 2025 Healthsource Chiropractic Franchise Disclosure Document, franchisees face specific obligations regarding inventory purchases, as detailed in Item 8. Franchisees must lease or purchase inventory, including dietary supplements, under the specifications outlined in the Healthsource Chiropractic Operations Manual. These specifications include standards for appearance, delivery, performance, quality control, and design.
Healthsource Chiropractic franchisees are required to purchase inventory from suppliers approved by Healthsource Chiropractic. The Operations Manual lists these approved suppliers, which may include Healthsource Chiropractic or its affiliates. This means a franchisee's choice of suppliers is restricted to those pre-approved by Healthsource Chiropractic, ensuring compliance with brand standards and potentially affecting pricing and product selection.
Healthsource Chiropractic maintains the right to approve a single supplier for any product or service and may concentrate purchases with specific suppliers to secure lower prices or better advertising support. The approval of a supplier may depend on factors such as delivery frequency, purchase volume, and service standards. Healthsource Chiropractic also estimates that expenditures on real estate, equipment, fixtures, products, marketing materials, services, and computer hardware and software from approved suppliers will represent approximately 50% of a franchisee’s total purchases and expenses in establishing and operating their Healthsource Chiropractic franchise. Therefore, compliance with these supplier restrictions is a significant aspect of operating a Healthsource Chiropractic franchise.