That is how franchising works. When you buy into the franchise you agree that they supply everything for your establishment. Without the ability to control where you get your supplies there would be no franchise model. The one source supply helps them maintain uniform quailty and commonality throughout all their franchised locations. It also allows them the purchasing power to acquire the item in bulk and in turn 'sell' them to the franchise locations.

Read your contract with the franchise company. It should be spelled out just what you are required to purchase from them. Anything that is not specifically on that list is not a required purchase. If, for instance, you are required to purchase all food items, fine. But perhaps you are not required to purchase cleaning supplies. MaryAnnBusiness Plan MasterStart and Finance Your Business Now ---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.

Both Kreegs, and BusinessPlanMaster, have been very clear about the Franchise business, and why it's 'not illegal' for a Franchise to want you to buy their products, and items. As Kreegs put it, that is the 'Franchise Model'. A Franchise invests in you, by giving to you their name, and goodwill, and by sharing with you a loyal following they have generated for their franchise (brand) name. However, if you are not a franchisee, then it may be viewed as illegal for any one entity or individual to insist that you have to buy everything from them. They cannot even make you sign a contract to that effect, as it is unlawful in the US to restrict free trade.

How about them requiring me to buy things from one certain vendor. Typically I get a choice to find the best price for the things I buy but for certain items they told me I have to buy from them regardless of their price. I am asking because my franchise wants me to buy things from one certain vendor and they are over priceing on items 50% atleast.

Hi Jamescha When you say 'my franchise wants me to buy things from a certain vendor', do you mean that they would like you to buy from that vendor, or are you saying that it is stipulated in your contract with them that you 'have to buy' from their vendors? If it is stipulated in your franchise agreement or contract with them, that you have to buy from their vendors, you do not have much choice. However, sometimes a franchisor may give their franchisee a choice, i.e. a list of recommended vendors, from whom you have to buy all the merchandise. In this case you can shop around within the list of recommended vendors. The reason why merchandise from the franchise-recommended vendors are overpriced is because these vendors will have to pay the franchise commissions or a fee for referring their merchandise. If the franchise has only SUGGESTED that you MAY buy from a list of recommended vendors, then you can always shop around and look for the same brand elsewhere. But you will have to confirm this first. If it's a kind of business which you think you can run, irrespective of whether you run it as a franchise or not, you may want to examine the exit and/or franchise termination clauses, and try and get out of the franchise. One example is franchise provision stores, such as 7/11. If you have the capital, and if you can figure out an ideal location (similar to the one on which the current franchise business is situated), you can set up on your own, and renegotiate with vendors. Best of luck.

Buying from the franchise also enables them to pay for the advertising to generate buisines... i.e. Subway is a good example

The mere fact that you acquired your business through franchising, you are bound to strictly follow all their rules even if you want to have or incorporate your own. Remember, it's not your original business concept.

You should check the contract to see if it is part of the agreement. If it is so, you are to abide by it.

Franchising by definition means giving up some of the flwexibility and operational control of your company, you're buying (in part) the right to operate someone elses brand, which has been built up over years by other people. they have a righ - and in fact an obligation to the other franchise holders - to ensure that certain defining characteristics of the brand remain intact. whether they can require you to use specific suppliers etc is probably a matter for the individual franchise agreement than something blanket. Remember that when you sign up to a franchise you are entering into a give and take contract. Say for example you buy a Subway sandwich franchise, then decide to source your ingredients from other, cheaper markets than the ones they require you to use. If you start using bad tomatoes and lettece in your subs, it affects your customers perception of the entire brand - not just your branch.

I think the fact that the contract needs to be reviewed has been well addressed here. But going back to the original poster's claim that the Franchise was operating 'a monopoly' it's important to understand that the situation he's describing isn't a monopoly at all, even though he might be required to buy from a specific vendor. A monopoly technically just means that there is only one seller for multiple buyers. I don't know much about franchising, but there's a great site run by a commercial litigation attorney who specializes in Franchise & Business Opportunity law at Bizop.ca. Message Edited by ChristineL on 11-27-2009 12:34 PM