How do the restrictions on suppliers for Mr. Sandless (Item 8) affect the franchisee's ability to offer competitive pricing within their territory (Item 12)?
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.
If you wish to purchase any item that we have not yet approved, or you wish to purchase from a supplier that we have not yet approved, you must make a written request to us and furnish us with any information we may reasonably need to evaluate the proposed item or supplier. We will make a good faith effort to notify you of our approval within 15 days of receiving such information. Our failure to approve a supplier within this 15-day period will constitute disapproval of the proposed supplier. You must reimburse our costs related to our evaluation of the proposed item or supplier, not to exceed $500. We have the right to revoke our approval of any item or supplier that no longer meets our criteria or does not serve the needs of the franchise network as a whole. We will notify you in writing, such as by e-mail or through changes to our Operations Manual, of any changes to our lists of approved supplies and approved suppliers. These lists are subject to change at any time.
To maintain the high quality and uniformity of System services and products, and to enhance the Business' image, we have established standards and specifications for other products, services, and equipment. Standards and specifications are provided to franchisees by way of amendments to the Operations Manual or otherwise in writing. We not issue our standards and specifications or otherwise make them available to you or any supplier. In some cases, we may specify particular brand names and model numbers (e.g., for equipment). Items for which we have issued specifications may be purchased from any supplier who sells the items meeting the specifications.
What This Means (2025 FDD)
According to Mr. Sandless's 2025 Franchise Disclosure Document, franchisees are restricted to purchasing products, equipment, and supplies from designated or approved suppliers. This includes the Franchise Starter Kit, invoices, and after-care packs, for which Mr. Sandless is currently the only approved supplier. All supplies ordered through Mr. Sandless are subject to a 10% administrative fee over their cost. In 2024, Mr. Sandless derived $277,344.28 (18%) of its total gross revenues ($1,516,126.42) from required franchisee purchases, including various fees, kits, materials, and supplies. These restrictions and fees could limit a franchisee's ability to source cheaper supplies elsewhere, potentially impacting their pricing strategy within their designated territory.
While franchisees can request approval for new suppliers, they must make a written request and provide necessary information for evaluation. Mr. Sandless will make a good faith effort to notify the franchisee of their approval within 15 days. The franchisee must reimburse Mr. Sandless for evaluation costs, up to $500. Mr. Sandless can revoke approval of any item or supplier that no longer meets their criteria. This process adds a layer of complexity and cost, potentially hindering a franchisee's ability to quickly adapt to market changes or secure better deals from alternative suppliers.
Mr. Sandless estimates that the costs of purchases from designated or approved sources will 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. These percentages highlight the significant financial impact of the supplier restrictions on a franchisee's overall expenses. The lack of purchasing or distribution cooperatives within the Mr. Sandless system further limits the potential for franchisees to collectively negotiate better pricing or terms with suppliers.
Item 12 states that franchisees do not receive an exclusive territory and may face competition from other franchisees, company-owned outlets, or other channels of distribution. Given this competitive landscape, the restrictions on suppliers could put Mr. Sandless franchisees at a disadvantage if their competitors have lower supply costs or more flexibility in pricing. The franchisee's ability to offer competitive pricing is therefore directly affected by Mr. Sandless's control over the supply chain and the associated costs.