Does Nothing Bundt Cakes have the right to derive revenue from supplier arrangements?
Nothing_Bundt_Cakes Franchise · 2025 FDDAnswer from 2025 FDD Document
We and/or our affiliates have the right to derive revenue from your purchases of these products if purchased from us, our affiliates or approved vendors.
During our fiscal year ended December 29, 2023, we entered into an arrangement with one of our distributors whereby we would receive revenues based upon the distributor's sale of products to the franchise system. We first received revenue under that arrangement during our fiscal year ended December 29, 2024, in the amount of $304,418.
During its fiscal year ended December 29, 2024, our affiliate, NBC Distribution, derived revenues of $118,595,761 from required franchisee purchases or leases.
We have the right to receive payments from suppliers on account of their dealings with you and other franchisees and to use all amounts we receive without restriction (unless instructed otherwise by the supplier) for any purpose.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 36–40)
What This Means (2025 FDD)
According to Nothing Bundt Cakes' 2025 Franchise Disclosure Document, Nothing Bundt Cakes and its affiliates have the right to derive revenue from franchisee purchases from approved vendors. The FDD states that Nothing Bundt Cakes entered into an arrangement with one of its distributors during the fiscal year ended December 29, 2023, where it would receive revenues based upon the distributor's sale of products to the franchise system. Nothing Bundt Cakes first received revenue under that arrangement during its fiscal year ended December 29, 2024, in the amount of $304,418.
For a Nothing Bundt Cakes franchisee, this means that the cost of goods and services may include a component that benefits the franchisor. This is a common practice in franchising, where franchisors negotiate deals with suppliers and receive a commission or rebate on franchisee purchases. The FDD also indicates that Nothing Bundt Cakes estimates that required purchases and leases from them or their designated suppliers will range from 85% to 91% when establishing the Bakery, and from 83% to 86% when operating the Bakery.
Furthermore, the FDD states that during the fiscal year ended December 29, 2024, Nothing Bundt Cakes' affiliate, NBC Distribution, derived revenues of $118,595,761 from required franchisee purchases or leases. The franchisor also has the right to receive payments from suppliers on account of their dealings with franchisees and to use all amounts received without restriction for any purpose, unless instructed otherwise by the supplier. This gives Nothing Bundt Cakes significant control over the supply chain and the potential to profit from franchisee purchases.