Date published: 13 June 2019
Summary: Some franchise systems require their franchisees to buy certain products from them or their specified supplier, known as supply restrictions. You might have no choice about where to buy some products.
Transcript
Sometimes when you buy a franchise it's not up to you where you buy your supplies.
Imagine you've just bought a cafe.
You want to make the best coffee in town at the best price.
You can buy your milk from anywhere, but you can only buy your coffee beans from one supplier, and they are expensive.
You can get coffee much cheaper from other suppliers, but your franchise agreement won't let you.
This is a supply restriction.
Supply restrictions are listed in your disclosure document and your franchise agreement.
In many cases supply restrictions are legal.
If they are legal and in your franchise agreement, you will have to follow them, even if it costs you more money.
Not sure about the supply restrictions?
Get independent advice from a lawyer, accountant, and business advisor about the franchise.
Make sure they have franchising experience.
For more information, see the website.