Does Mrcool reserve the right to designate a single supplier for System Supplies?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
- (5) Franchisor reserves the right to designate from time to time a single supplier and/or distributor for any services, products, equipment, supplies, or materials including, but not limited to, the System Supplies and to require Franchisee to use such a designated supplier exclusively, which exclusive designated supplier and/or distributor may be Franchisor and/or Franchisor's affiliates.
Franchisor and its affiliates may receive payments from suppliers and/or distributors on account of such supplier's or distributor's dealings with Franchisee and other franchisees and Franchisor may use all amounts so received without restriction and, for any purpose, including Franchisor's profit.
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, Mrcool does reserve the right to designate a single supplier or distributor for System Supplies. Specifically, Mrcool can require franchisees to exclusively use this designated supplier, which could be Mrcool itself or one of its affiliates. This means that as a franchisee, you may be obligated to purchase all System Supplies from a single source chosen by Mrcool.
This arrangement has several implications for prospective franchisees. While Mrcool states that approved suppliers must meet their standards, specifications, and requirements, the franchisee may not have the option to seek out alternative suppliers, even if they offer better prices or terms. This could impact the franchisee's costs and potentially reduce profit margins.
Furthermore, the FDD states that Mrcool and its affiliates may receive payments from these designated suppliers based on the franchisee's purchases. Mrcool is allowed to use these payments without restriction, including for their own profit. This creates a potential conflict of interest, as Mrcool may be incentivized to choose suppliers that provide them with the highest payments, rather than those that offer the best value to the franchisee.
It is important for prospective Mrcool franchisees to carefully consider these factors and evaluate the potential impact on their business. Understanding the terms and conditions related to supplier designation is crucial for making an informed decision about investing in a Mrcool franchise.