Can Mrcool withhold approval of a supplier in its sole discretion?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
If you want to purchase or lease a source restricted item from a supplier that has not been previously approved or designated by us in writing, you must send us a written request for approval and submit additional information, samples, and testing data that we may request. We may charge you a fee equal to the costs and expenses that we incur in reviewing and evaluating an alternate supplier, product, and/or service requested by you. We may request that you send us samples from the supplier for testing and documentation from the supplier for evaluation. We may also require, subject to our discretion, that we be allowed to inspect the supplier's facilities. We will notify you of our approval or disapproval within a reasonable time not exceeding 60 days after we receive your written request and all additional information and samples that we request. We may, in our sole discretion, withhold our approval. We do not make our procedures or criteria for approving suppliers available to our System franchisees, except that when evaluating the approval of a particular supplier, among other things, we consider: whether the supplier can demonstrate to our reasonable satisfaction the ability to meet our standards, specifications and production requirements, the suppliers quality control, whether or not we are the exclusive supplier of the particular item, whether or not our affiliate or affiliates are the exclusive supplier of the particular item, and whether or not the suppliers approval, in our sole determination, will allow us to advance the overall interests of the System and our company. If we have previously approved a supplier, and their standards fall below our designated standards, we will revoke our approval. We will notify you in writing of us revoking our approval.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 23–26)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, Mrcool retains the right to withhold approval of a supplier at its sole discretion. If a franchisee wishes to use a supplier not already approved by Mrcool, the franchisee must submit a written request for approval, along with any information, samples, and testing data requested by Mrcool. Mrcool may charge a fee to cover the costs of reviewing and evaluating the proposed supplier. Mrcool may also request samples for testing, documentation for evaluation, and even inspect the supplier's facilities.
The FDD states that Mrcool will notify the franchisee of its decision within a reasonable time, not exceeding 60 days after receiving the written request and all required information. However, Mrcool explicitly states that it may withhold approval in its sole discretion. The document outlines some considerations Mrcool takes into account when evaluating a supplier, such as the supplier's ability to meet Mrcool's standards, quality control, and whether approving the supplier will advance the overall interests of the Mrcool system. However, these criteria do not limit Mrcool's right to disapprove a supplier.
This policy is fairly common in franchising, as franchisors want to maintain quality control and consistency across their systems. However, it is important for prospective Mrcool franchisees to understand that Mrcool has significant control over their supply chain. The FDD also states that Mrcool can revoke approval of a previously approved supplier if their standards fall below Mrcool's designated standards. This further emphasizes Mrcool's control over the supply chain and the franchisee's dependence on Mrcool's decisions regarding suppliers.
For a prospective franchisee, this means they may have limited flexibility in choosing suppliers and may be required to purchase goods and services from Mrcool-approved sources, even if they believe they could obtain better pricing or terms elsewhere. The FDD estimates that purchases from approved suppliers will represent approximately 85% of the franchisee's total purchases and leases in establishing the Franchised Business and approximately 25% of the on-going operating expenses of the Franchised Business. This highlights the importance of understanding Mrcool's supplier approval process and the potential impact on the franchisee's costs and operations.