Does Nothing Bundt Cakes have the right to receive payments from suppliers based on their dealings with franchisees?
Nothing_Bundt_Cakes Franchise · 2025 FDDAnswer from 2025 FDD Document
with testing a particular product or evaluating an unapproved supplier at your request, you or the supplier must reimburse our reasonable testing costs, regardless of whether we subsequently approve the item or supplier.
We will use our best efforts to notify you of our approval or disapproval of a particular supplier or product within 10 business days of receiving all requested information. If you do not receive our approval within 30 days after submitting all of the information that we request, the request will be deemed disapproved. We may base our approval of any proposed item or supplier on considerations relating not only directly to the item or supplier itself (such as the quality of products, standards of service, the supplier's reputation in the marketplace, and the supplier's pricing), but also other factors such as the uniformity, efficiency and quality of operation we deem necessary or desirable in our system as a whole, the confidentiality of our standards and specifications, and our ability to earn revenue from your purchase of goods and services. We have no obligation to approve any particular product, services, or source. 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. If we approve any previously unapproved product or service, we may require you to purchase the product or service from us, our affiliates, or other approved and designated suppliers. We will not approve an unreasonable number of suppliers if the approval might result in higher costs to System franchisees or prevent the effective or economical supervision of approved suppliers.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 36–40)
What This Means (2025 FDD)
According to the 2025 Nothing Bundt Cakes Franchise Disclosure Document, Nothing Bundt Cakes has the right to receive payments from suppliers based on their dealings with franchisees. Nothing Bundt Cakes can use these payments without restriction, unless the supplier instructs otherwise, and can use the funds for any purpose.
Nothing Bundt Cakes franchisees are required to purchase products from approved suppliers. Nothing Bundt Cakes may base its approval of any proposed item or supplier on considerations relating not only directly to the item or supplier itself (such as the quality of products, standards of service, the supplier's reputation in the marketplace, and the supplier's pricing), but also other factors such as the uniformity, efficiency and quality of operation Nothing Bundt Cakes deems necessary or desirable in its system as a whole, the confidentiality of its standards and specifications, and its ability to earn revenue from franchisee purchases of goods and services.
For the fiscal year ended December 29, 2024, Nothing Bundt Cakes received $304,418 in revenue from an arrangement with one of its distributors based on the distributor's sales to the franchise system. During the same period, Nothing Bundt Cakes's affiliate, NBC Distribution, derived revenues of $118,595,761 from required franchisee purchases or leases. This demonstrates that Nothing Bundt Cakes benefits financially from these supplier relationships and franchisee purchases.