VENDORS WRITE AND DESCRIBE SUPPLIER KICKBACKS AT BASKIN ROBBINS AND ALLIED BRANDS (ABQ)

Several Australian vendors of supplies and merchandise used by Baskin Robbins, Cookie Man, and Kenny's Cardiology have contacted us over the years to describe pricing "rebates" (kickbacks) they've been forced to agree with before products will be approved for sale to franchisees.

In the case of three different product lines, these kickbacks have been confirmed by vendor sources. In the most willfull case, franchisees for Baskin Robbins were switched from high-quality imported product to local supplies, said to be cheaper. But the "rebates" demanded by Baskin Robbins management has meant these local products can be sourced more cheaply thru other suppliers - at up to 20% less than the "Baskin Robbins" price. Therefore these suppliers are seeing volume business they were promised turning to other vendors and cheaper pricing.

Another vendor of a specialty product has refused to pay the "rebate" demanded by the employee, and has reported that this same employee demanded the same type of rebate when working at Wendy's. The "rebate" was refused by this vendor at that time, as well. Clearly someone with some honesty AND backbone. However they've seen other vindictive actions taken against their company in retaliation.

What is yet unclear is who's pocketing these rebates. While rebating itself isn't a violation of the Trade Practises Act, failure to disclose the rebating IS a violation. Franchise agreements for Baskin Robbins Australia list NO such rebates. Therefore this practice is illegal, and is considered Unconscionable Conduct by the ACCC. In any event IT'S CLEAR THEFT FROM THE FRANCHISEES, LOWERING PROFITS THAT BELONG TO THE SHOP OWNER!

It could be however that management employees, in business for themselves, are in someway involved in these transactions for their personal balance sheets.

The rebating is extremely damaging to the franchisees and more importantly to the concept of franchising. The "appeal" of a franchise is supposed to be in part lower operating costs driven by "group purchasing power". It's obvious that if products being forced on Baskin Robins franchisees are available cheaper on the open market, something in the process has been seriously corrupted.

It is also likely that the master franchise agreement between Baskin Robbins America and Allied Brands bans rebating, meaning that another part of the agreement is in breach.