h proposed equipment or supply item and Franchisor will be reimbursed by Franchisee for the costs of testing such items. In addition, Franchisor reserves the right at any time to require substitution of newly developed Proprietary Products for non-proprietary items, which would then be sold to Franchisee in accordance with Section 4.6. The sale by Franchisor, if offered, of nonproprietary equipment and supplies to Franchisee shall include a commerciallyFranchising companies must address consistency of the products they use both in the operation of the franchise and those are items which they sell. The franchising company must address these issues in the original franchise agreements that each franchisee signs. If some franchisees by their paper napkins from one company and another franchisee trying to save money buys their paper napkins from another company to save money; there might be a problem with the quality from one of the companies that the napkins are bought from. This can cause customer complaints, quality control issues and presents a problem for all franchisees of the franchising system.

To prevent this from happening in my company I added a clause to our franchise agreements to address the issue of approved vendors, quality control issues and consistency. Below is a copy of that clause in our franchise agreements;

4.6 Non-Proprietary Equipment and Supplies

Franchisee will have the right to purchase equipment and supply items, other than Proprietary Products, for use in providing Services, from any responsible source; provided, however, that Franchisor reserves the right to approve suppliers, equipment and supply items. Independent suppliers will be approved by Franchisor if their products meet the reasonable quality standards established by Franchisor. In order to obtain approval of any such proposed alternative equipment or supply item, Franchisee will provide Franchisor with documentation from a source independent of Franchisee or the proposed supplier which demonstrates, to the reasonable satisfaction of Franchisor, that the proposed alternative equipment or supply item performs as well as the item to re replaced.

Nothwithstanding such documentation, Franchisor will have the right to test further any such proposed equipment or supply item and Franchisor will be reimbursed by Franchisee for the costs of testing such items. In addition, Franchisor reserves the right at any time to require substitution of newly developed Proprietary Products for non-proprietary items, which would then be sold to Franchisee in accordance with Section 4.6. The sale by Franchisor, if offered, of nonproprietary equipment and supplies to Franchisee shall include a commercially

h the quality from one of the companies that the napkins are bought from. This can cause customer complaints, quality control issues and presents a problem for all franchisees of the franchising system.

To prevent this from happening in my company I added a clause to our franchise agreements to address the issue of approved vendors, quality control issues and consistency. Below is a copy of that clause in our franchise agreements;

4.6 Non-Proprietary Equipment and Supplies

Franchisee will have the right to purchase equipment and supply items, other than Proprietary Products, for use in providing Services, from any responsible source; provided, however, that Franchisor reserves the right to approve suppliers, equipment and supply items. Independent suppliers will be approved by Franchisor if their products meet the reasonable quality standards established by Franchisor. In order to obtain approval of any such proposed alternative equipment or supply item, Franchisee will provide Franchisor with documentation from a source independent of Franchisee or the proposed supplier which demonstrates, to the reasonable satisfaction of Franchisor, that the proposed alternative equipment or supply item performs as well as the item to re replaced.

Nothwithstanding such documentation, Franchisor will have the right to test further any such proposed equipment or supply item and Franchisor will be reimbursed by Franchisee for the costs of testing such items. In addition, Franchisor reserves the right at any time to require substitution of newly developed Proprietary Products for non-proprietary items, which would then be sold to Franchisee in accordance with Section 4.6. The sale by Franchisor, if offered, of nonproprietary equipment and supplies to Franchisee shall include a commercially

Proprietary Equipment and Supplies

Franchisee will have the right to purchase equipment and supply items, other than Proprietary Products, for use in providing Services, from any responsible source; provided, however, that Franchisor reserves the right to approve suppliers, equipment and supply items. Independent suppliers will be approved by Franchisor if their products meet the reasonable quality standards established by Franchisor. In order to obtain approval of any such proposed alternative equipment or supply item, Franchisee will provide Franchisor with documentation from a source independent of Franchisee or the proposed supplier which demonstrates, to the reasonable satisfaction of Franchisor, that the proposed alternative equipment or supply item performs as well as the item to re replaced.

Nothwithstanding such documentation, Franchisor will have the right to test further any such proposed equipment or supply item and Franchisor will be reimbursed by Franchisee for the costs of testing such items. In addition, Franchisor reserves the right at any time to require substitution of newly developed Proprietary Products for non-proprietary items, which would then be sold to Franchisee in accordance with Section 4.6. The sale by Franchisor, if offered, of nonproprietary equipment and supplies to Franchisee shall include a commercially

obtain approval of any such proposed alternative equipment or supply item, Franchisee will provide Franchisor with documentation from a source independent of Franchisee or the proposed supplier which demonstrates, to the reasonable satisfaction of Franchisor, that the proposed alternative equipment or supply item performs as well as the item to re replaced.

Nothwithstanding such documentation, Franchisor will have the right to test further any such proposed equipment or supply item and Franchisor will be reimbursed by Franchisee for the costs of testing such items. In addition, Franchisor reserves the right at any time to require substitution of newly developed Proprietary Products for non-proprietary items, which would then be sold to Franchisee in accordance with Section 4.6. The sale by Franchisor, if offered, of nonproprietary equipment and supplies to Franchisee shall include a commercially

h proposed equipment or supply item and Franchisor will be reimbursed by Franchisee for the costs of testing such items. In addition, Franchisor reserves the right at any time to require substitution of newly developed Proprietary Products for non-proprietary items, which would then be sold to Franchisee in accordance with Section 4.6. The sale by Franchisor, if offered, of nonproprietary equipment and supplies to Franchisee shall include a commercially reasonable markup.

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Every franchise company is well advised to maintain a strong approved vendor list of quality products that will be used in the operation of the franchise. The franchise company needs to address this issue in the franchise agreements and seek expert legal advice from a franchise attorney who is a specialist with experience in the franchising field. I hope you will consider this in 2006.