Can Red Wagon Club concentrate purchases with specific suppliers?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
We may concentrate purchases with one or more suppliers to obtain lower prices, advertising support and/or services for any group of RWC Businesses, whether franchised or operated by us or our affiliates. We may also designate a single supplier for any product, service, Operating Asset, or other material, or approve a supplier only for certain products or services.
We estimate that 40% of your initial investment and 30% of your ongoing expenditures will require you to purchase products and services that will be restricted by us in some manner. You will not receive any material benefits from your compliance with these standards and specifications, or from your purchases from designated or approved vendors.
If you would like to purchase or use any products, services, supplies or materials from any unapproved supplier, you must submit to us a written request for approval of the proposed supplier before purchasing any such products, services, supplies or materials. Your request must include sufficient specifications and information about the proposed supplier. Our criteria for approving suppliers is confidential and not made available to franchisees. Under our current evaluation procedure, we will notify you in writing of the approval or rejection of the proposed supplier within 6 months of our receipt of all requested information. You must pay us any actual costs we incur in connection with our review of your request. If we fail to respond within 6 months, your request will be deemed denied. If we approve your request, we may later revoke our approval by notifying you in writing if the supplier does not continue to meet any of our criteria. You may not directly contract with any alternative supplier without our prior written approval.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 19–22)
What This Means (2024 FDD)
According to Red Wagon Club's 2024 Franchise Disclosure Document, Red Wagon Club has the right to concentrate purchases with specific suppliers. Red Wagon Club may concentrate purchases with one or more suppliers to obtain lower prices, advertising support, and/or services for any group of Red Wagon Club Businesses, whether franchised or operated by them or their affiliates. They may also designate a single supplier for any product, service, Operating Asset, or other material, or approve a supplier only for certain products or services.
Red Wagon Club estimates that 40% of a franchisee's initial investment and 30% of their ongoing expenditures will require them to purchase products and services that will be restricted by Red Wagon Club in some manner. Franchisees will not receive any material benefits from their compliance with these standards and specifications, or from their purchases from designated or approved vendors.
If a franchisee would like to purchase or use any products, services, supplies, or materials from any unapproved supplier, they must submit a written request for approval to Red Wagon Club before purchasing any such items. The request must include sufficient specifications and information about the proposed supplier. Red Wagon Club's criteria for approving suppliers is confidential and not made available to franchisees. Under their current evaluation procedure, Red Wagon Club will notify the franchisee in writing of the approval or rejection of the proposed supplier within 6 months of their receipt of all requested information. The franchisee must pay Red Wagon Club any actual costs they incur in connection with their review of the request. If Red Wagon Club fails to respond within 6 months, the request will be deemed denied. If Red Wagon Club approves the request, they may later revoke their approval by notifying the franchisee in writing if the supplier does not continue to meet any of their criteria. The franchisee may not directly contract with any alternative supplier without Red Wagon Club's prior written approval.