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What are the responsibilities of a franchisor to an approved vendor.
When a franchisor allows an approved vendor to sell product to the franchisees what rights does the vendor have regarding eqaul access to franchisees, and freedom for presentation uninhibited by the franchisor. In this situation the approved vendor (there are two plus the franchisor) sells a point of sale system (POS) to the franchisees. In this instance what are the rights, given that the franchisor has approved the selling of all 3 systems, for customer contact information and access to the franchisees. Also does the franchisor have the responsibility to provide information to the franchisee for the approved systems as well as the time and opportunity for the franchisee to decide?
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Be inhibited
Be inhibited... be very inhibited. Tick off the franchisor (or fail to grease them sufficiently) and you will find yourself dropped from the approved vendor list faster than you can say "baksheesh."Signed Agreement With Vendor?
When you say "allowed", please be more specific. Is there a signed agreement between the franchisor and vendor? Is the vendor on a list of "must-use" or "preferred vendors"?
If the vendor has no signed agreement, they have the "right" to approach anyone that they want. If they compete for a vendor position that the franchisor has defined as "must-buy from our specific vendor" than the vendor can try to sell the franchisee, but frankly, they won't get very far.
APPROVED VENDOR DEALS
Historically, approved vendor programs have been for the purpose of establishing extraneous revenue streams by granting approval to otherwise acceptable vendors who will pay for the privilege. The payment can take many forms - another subject entirely - but the payment is usually there.
There are too many approvable vendors in normal channels of trade for there to be any real fear about quality control anymore. You can have provisions in contracts and operations manuals forbidding deliterious products being used in any aspect of the franchised business. An excellent example of that is salvaged goods from disasters and train/truck wrecks.
In a system in which the franchisees have had the guts to make a stand, they control the approved vendor program or must consent to any approved vendor before the vendor can be approved. Payments (regardless of kind) go to the franchisee advert program and for other purposes. I know of a few multi unit franchisees who annually receive checks for over a million dollars from soft drink vendors - and that's on top of everything else that is provided to the system as a whole.
When the franchisees control the approved vendor program, company owned stores get the same treatment as those owned by the franchisees. When the franchisor controls the approved vendor program, the "benefits" of group buying power are there, but are rarely passed on to the franchisees. The franchisor takes that money for itself and says that it is applied to franchisee improvement activities - Meineke was a great example of how that story works.
All that has to be in any vendor agreement is that the vendor will be responsible for quality control and compliance with applicable laws and regs; will indemnify and hold harmless for incidents when claims are made that arise from using the products provided; will carry specified insurance coverages and amounts; will provide most favorite customer pricing formulae; and that the vendor relationship may be terminated on short/no notice if it is terminated for cause, and on reasonable notice without cause.
That keeps the vendor's feet to the fire.
Richard Solomon
www.FranchiseRemedies.com
Vendor Relationships
As the FrankMan has pointed out there are a variety of relationships.
For example at FranSynergy we enter into a variety of relationships with franchisors:
Designated Service Provider: Franchisees are required to use the FranSynergy product offering, and disclosure is obviously required.
Preferred Vendor: The franchisor has recognized FranSynergy as a quality service provider for various products and services. This is a kin to a recommendation and/or endorsement of The FranSynergy Franchise Service Package.
Approved Vendor: The franchisor is simply recognizing and acknowledging that the FranSynergy Franchise Service Package meets or exceeds the requirements of the franchisor.
In each of the above scenarios we have a Franchisor Service Agreement which defines the relationship and outlines the responsibilities we have to both the Franchisor and to each Franchisee and that the Franchisor has to us. This agreement addresses all the normal things which you'd expect to be included: confidentiality and disclosure, use of marks, quality of service, approved marketing means and methods etc....
Additionally, if and when a franchisor does not require their franchisees to use a spedcified vendor or select from a specified vendor list, we have franchisees who utilize our program and we have no pre-defined relationship with the franchisor. Although we accept franchisees without us having a pre-existing relationship with the franchisor, we do not aggressively solicit business in this manner.
Regardless of if we have a contractual relationship with a franchisor or not, we enter into a separate Franchise Subscription Agreement with each franchisee subscriber which outlines our responsibilities to the franchisee.
Bottom Line: as in all agreements the terms and conditions of the agreement define the responsibilities of each party to the agreement.
Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com
Changes in Attitudes & Altitudes
It has long been a practice of many/most franchisors to accept, require or demand – rebates, commissions and other valuable considerations from approved vendors.
However, more and more franchisors are now realizing the negative impact of this practice and understanding that it only results in higher prices for the ZEE which in turn must be passed on to the consumer and ultimately erodes the competitive advantage franchisees should enjoy in the market place.
In franchising the old saying “A penny saved is a penny earned” is an understatement. Here’s an admittedly over simplified example.
EXAMPLE 1
Revenue $100
Expenses $ 70
Royalty $ 10
Net $ 20
EXAMPLE 2
Revenue $100
Expenses $ 63 (10% Reduction)
Royalty $ 10
Net $ 27
A 35% increase in the bottom line. A portion of which is then reinvested to increase Revenue
EXAMPLE 3
Revenue $110
Expenses $ 69
Royalty $ 11
Net $ 30
Zee revenue is now up! Zee profit is up! Result happy & profitable Zees. Zor royalty revenue is up 10%. Happier more profitable ZEEs result in lower marketing and support cost for ZOR, increased Franchise Sales, overall revenue and profits.
Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com
APPROVED VENDORS PART II-UPS/MBE
THIS IS ALSO ANOTHER PART OF THE SCAM OF THE 21st CENTURY.WE ARE TOLD THESE VENDORS GIVE US "THE BEST RATE POSSIBLE"..UTTER AND TOTAL NONSENSE...THESE VENDORS ALWAYS CHARGE US A HIGHER RATE..TMP..DONOR JUST TO NAME 2,LOVE TO JACK UP THE PRICE...ANYTHING I NEED I JUST GO TO MY LOCAL STAPLES OR OFFICE DEPOT AND PAY THE SAME PRICE AS THE REST OF THE FREE WORLD...IF UPS/MBE SAYS THEY ARE "LOOKING OUT FOR US" TOTAL B.S. .... THEY ARE JUST LOOKING FOR OUR WALLETS.Vendor Contracts-another weapon in the Franchisor's arsenal
Let me give you a real-life example
The MAIN supplier for Meineke franchisees is Maremont which distributes all the exhaust products, Raybestos brake products & Gabriel shocks/struts.
Now, with ONE phone call, Meineke's attorney tells Maremont that they have terminated our franchise because we owed them over $22,000 in back royalties. This sounds terrible doesn't it? It sure does and it would be if it were true. At the time they were completely paid off and even before that they amount owed when they sent out the 10 day notice of termination was $2500. Strangely, it didn't matter that we could prove (WITH documentation) the attorney's statements to Maremont were lies. They certainly weren't going to stand up to them on our behalf, so they refused to sell to us. Now, we're not talking about selling at some negotiated Meineke rate.....................we're talking, selling any exhaust, brakes or shock parts at ALL. They even cancelled a shipment we had on order at the time. Yet another rug pulled out from under us.
We were supposed to be so beaten down by this time, that we'd have no choice but to crawl away to lick our wounds. Well, we're certainly limping, but we're STILL HERE.................and Meineke's chickens come home to roost in less than a month.
Another example of what can happen when FRANCHISORS ATTACK.
Lisha
Rhino Super Center
Meineke publication of defamatory matter
You might have state law claims for defamation and tortious interference.Exactly
This is one of the reasons we have 3 different lawyers.
Lisha
Rhino Super Center
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