Can Red Wagon Club revoke its approval of a supplier after initially approving them?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
We may, with or without cause, revoke our approval of any supplier or product at any time upon written notice to you, and we may periodically reinspect the facilities, products, or services of any approved supplier. Supplier or product approval might be temporary until we evaluate the supplier or product in more detail.
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 revoke approval of a supplier or product at any time. Red Wagon Club can revoke approval with or without cause, as long as they provide written notice to the franchisee. They may also periodically reinspect the facilities, products, or services of any approved supplier. Supplier or product approval might be temporary until Red Wagon Club evaluates the supplier or product in more detail.
If a Red Wagon Club franchisee wants to use an unapproved supplier, they must submit a written request for approval, including sufficient specifications and information about the proposed supplier. Red Wagon Club's criteria for approving suppliers is confidential and not made available to franchisees. Red Wagon Club will notify the franchisee in writing of the approval or rejection of the proposed supplier within 6 months of receiving all requested information. The franchisee must pay Red Wagon Club's actual costs for reviewing the request. If Red Wagon Club fails to respond within 6 months, the request is deemed denied.
Even if Red Wagon Club approves a supplier, they can later revoke their approval by notifying the franchisee in writing if the supplier no longer meets Red Wagon Club's criteria. The franchisee cannot directly contract with any alternative supplier without Red Wagon Club's prior written approval. This allows Red Wagon Club to maintain control over the supply chain and ensure that all products and services meet their standards, but it also means that franchisees are subject to Red Wagon Club's decisions regarding suppliers and may have to change suppliers even after they have been approved.