Can a Red Wagon Club franchisee directly contract with an alternative supplier without Red Wagon Club's approval?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
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, a franchisee cannot directly contract with an alternative supplier without obtaining prior written approval from Red Wagon Club. To seek approval, a franchisee must submit a written request that includes sufficient specifications and information about the proposed supplier.
The evaluation criteria Red Wagon Club uses to assess suppliers remains confidential and is not disclosed to franchisees. Red Wagon Club will notify the franchisee in writing regarding the approval or rejection of the proposed supplier within six months of receiving all the necessary information. If Red Wagon Club fails to respond within this six-month timeframe, the request is automatically considered denied. The franchisee is responsible for covering any actual costs incurred by Red Wagon Club during the review process.
Even if a supplier is initially approved, Red Wagon Club retains the right to revoke this approval later if the supplier fails to continue meeting Red Wagon Club's criteria. This requirement ensures that Red Wagon Club maintains control over the quality and consistency of products and services used within its franchise system. This is a fairly standard practice in franchising, as franchisors typically want to ensure brand consistency and quality control across all franchise locations.