What are the consequences of a Mr. Sandless franchisee failing to meet the obligations regarding approved suppliers (Item 8) and how does this relate to their obligations (Item 9)?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
Approved Products, Equipment, Supplies and Suppliers
We have the right to establish designated and approved suppliers for products and services offered in connection with the Business. When establishing the Business, you must purchase or lease products, including supplies, branded clothing, inventory items and equipment, from designated or approved suppliers, which may include us, and you must enter into service agreements with approved vendors, as directed by us. We may be an approved supplier, but not the only approved supplier, of equipment, tools, inventory, job tins, and uniforms, but you are not required to purchase these items from us. We are currently the only approved supplier for the Franchise Starter Kit, invoices and after care packs. All supplies ordered through us are subject to a 10% administrative fee over our cost.
We will derive revenue from sales of items to our franchisees. We may also sell or lease certain other supplies, products and services ourselves and, if we do, we will derive revenue from those sales. To streamline the process, our manufacturer of our supplies collects our 10% service fee on our behalf (see Item 6 In the year ended December 31, 2024, we derived $ 277,344.28 (18%) of our total gross revenues of $ 1,516,126.42 from required franchisee purchases, including convention fees, administration fees, ad fund fees, franchise kit, tollfree number fee, Gmail, materials and supplies.
We specify the use of a standardized vehicle dedicated to the Business, which can be any type as long as it holds the equipment and is silver in color.. If you are purchasing a Mr. Sandless Business only, your service vehicle must be silver.
What This Means (2025 FDD)
Based on the 2025 Mr. Sandless Franchise Disclosure Document, Item 8 discusses the restrictions on sources of products and services. Mr. Sandless has the right to establish designated and approved suppliers for products and services offered in connection with the business. When establishing the business, franchisees must purchase or lease products, including supplies, branded clothing, inventory items, and equipment, from designated or approved suppliers, which may include Mr. Sandless, and enter into service agreements with approved vendors, as directed by Mr. Sandless. All supplies ordered through Mr. Sandless are subject to a 10% administrative fee over their cost. In the year ended December 31, 2024, Mr. Sandless derived $277,344.28 (18%) of its total gross revenues of $1,516,126.42 from required franchisee purchases, including convention fees, administration fees, ad fund fees, franchise kit, toll-free number fee, Gmail, materials, and supplies. The costs of purchases from designated or approved sources, or according to Mr. Sandless' standards and specifications, are estimated to range from 40% to 80% of the total cost of establishing the business, and approximately 5% to 7% of the total cost of operating the business.
Item 9 outlines the franchisee's obligations. According to section 9.4, franchisees must comply with Mr. Sandless' policies and procedures. While the document specifies that failure to comply with minimum performance criteria (performing not less than eight floor jobs a month within six months of the Grand Opening) will be a material default of the agreement, it does not explicitly state the consequences of failing to adhere to the approved supplier requirements outlined in Item 8.
Therefore, it is important for a prospective Mr. Sandless franchisee to directly ask the franchisor about the specific consequences of failing to purchase from approved suppliers, as this is not detailed in Item 9 of the FDD. Understanding these consequences is crucial for assessing the potential risks and costs associated with the franchise.