Identify Purchasing Restrictions

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Can franchisees purchase goods and services from any vendor?

Identify Purchasing Restrictions

To maintain consistency, quality and identity of your franchise products and services you have to restrict your franchisee's purchasing options. You can list all purchasing obligations and restrictions in Item 8 of the Uniform Franchise Offering Circular (UFOC).

The franchisee will be expected to purchase products and services in accordance with your specifications and only from vendors you've approved. You may establish a process that allows a franchisee to submit a new vendor for your approval.

If there are any products or services that must be purchased directly from you or your affiliates, you have to list them. In addition to descriptions, specify whether the items are required or optional purchases. In addition to the equipment, signs, products and supplies, you will also demand that the franchisee purchase insurance coverage for their business. You will set the minimum standards for insurance coverage. If you have established purchasing or distribution cooperatives, you will list them and the products they provide.

   

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