# Item 8, suppliers
Item 8 discloses restrictions on sources of products and services. [16 CFR 436.5(h)](https://www.law.cornell.edu/cfr/text/16/436.5) requires the franchisor to say whether you must buy from the franchisor, an affiliate, or approved suppliers; whether there are cooperatives; whether specifications exist; and whether the franchisor or affiliates receive revenue or other material consideration from required purchases. It is the procurement chapter. It is also, in restaurant deals, a profit center.
## What "required" covers
Not only food. Item 8 often reaches:
- proprietary proteins, sauces, breads and packaging;
- smallwares and branded disposables;
- POS, online ordering, and required software;
- architect, design or project-management vendors;
- insurance brokers or required coverage through a program;
- opening inventory and smallwares packages;
- music, mystery shop, and other "brand experience" vendors.
Item 6 may charge a technology fee while Item 8 requires the hardware from a named vendor. Dog Haus's May 2024 comparative record includes a technology development fee of $5,000 a year on top of a marketing fee that may rise to 3.5%. Capriotti's same-year record includes a technology fee of 0.65% of gross sales on top of royalty and funds. Those are Item 6 rows. Item 8 is where you learn whether you can buy a different POS anyway.
GDK's FDD issued 3 September 2024 lists hardware and software at $27,500–$30,000 in Item 7, plus restaurant equipment $140,000–$175,000. Shah's FDD issued 10 April 2024 lists computer hardware, software and POS at $4,000–$6,000 and a fixture package at $30,000–$50,000. 375° Chicken 'n Fries's FDD issued 30 April 2024 splits POS ($4,000–$6,000) from computer systems ($500–$1,500) and furniture, fixtures and equipment ($100,000–$120,000). Those are cost ranges. Item 8 tells you whether the buyer has a choice of vendor at those prices.
## Revenue to the franchisor
The rule requires disclosure of whether the franchisor or affiliates receive rebates, mark-ups or other consideration from suppliers, and the basis. A system that sells you the sauce from an affiliate is collecting margin in a place that is not called "royalty." A system that takes a percentage rebate from a distributor is doing the same with extra steps.
That is not automatically abusive. It is automatically a number that belongs in the model beside Item 6. If Item 8 says the franchisor receives rebates but does not state enough to estimate them, leave the cell blank and ask. Do not invent a percentage.
Great Greek's FDD issued 17 August 2023 bundles a "Restaurant Package" at $225,964–$248,560. That is an Item 7 package line. Item 8 should say who you must buy it from and whether the franchisor earns on it. GDK's filing splits equipment, fit-out materials, MEP and smallwares into separate rows; the restriction story may be scattered. Read Item 8 as the index.
## Cooperatives and specifications
Some filings let you buy to spec from any vendor who meets the spec. Some require an approved list. Some require a single source. Some waive a local-advertising spend if you join a cooperative that can itself levy — GDK's 2024 FDD says the 2% local spend is waived if the store joins a GDK advertising cooperative, which can itself levy up to 2%. That is Item 6 and Item 11 as much as Item 8, but the cooperative is a buying-and-spending restriction.
Shah's 1% local and 1% brand fund, The Halal Guys' 1% local and 2% brand fund, Mad for Chicken's 1% local plus a brand fund described as 1% plus 1% media (each able to rise to 2%) — May 2024 comparative study or the dated FDDs named on those records — are spend obligations. Item 8 is where required marketing vendors, if any, appear.
A compact production box. Required equipment and food inputs have to fit this shell; Item 8 says who you must buy them from.
## A worked reading method
Item 8 desk pass
- List every good or service you must buy from the franchisor or an affiliate.
- List every approved-supplier category, and whether you may propose an alternate.
- Copy any disclosed rebate or mark-up, with the basis. Leave blanks blank.
- Match Item 7 package, equipment, technology and inventory rows to those restrictions.
- Match Item 6 technology and required-purchase fees to the same vendors.
- Ask franchisees about price, fill rates, and what happens when a required item is out.
- Do not substitute a kitchen tour for the approved-supplier list.
Worked comparison without naming vendors. GDK's opening inventory is $15,000–$20,000 (FDD issued 3 September 2024). Shah's initial inventory is $10,000–$30,000 (FDD issued 10 April 2024). Great Greek's opening inventory is $7,000–$15,000 on top of a $225,964–$248,560 restaurant package (FDD issued 17 August 2023). Mad for Chicken's initial inventory is $14,250–$28,200 (FDD issued 3 May 2024). 375° Chicken 'n Fries's is $5,000–$10,000 (FDD issued 30 April 2024). The inventory row is not the restriction. A tight inventory range with a single-source protein is a different business from a wide range with a spec.
bluTaco's May 2024 comparative record discloses no initial fee, no required local advertising and no grand-opening requirement. Item 8 may still be a thick approved-list chapter. Absence of Item 5 is not absence of procurement control.
Döner Haus appears in this set as a 700–1,200 square-foot imbiss (2026 FDD) with an Item 7 total range of $359,500–$586,000. Read Item 8 of the current FDD for required purchases; a shop visit is not that list.
## Related reading
- [Ongoing fees](/ongoing-fees/) — rebates sit beside royalties in the model
- [What it costs to open](/what-it-costs/) — Item 7 rows that Item 8 freezes
- [Item 11, franchisor assistance](/item-11-franchisor-assistance/) — software and advertising programs
- [Footprint and labor questions](/footprint-and-labor-questions/) — the box those goods have to fit
- [Franchisor question list](/franchisor-question-list/) — what to ask about fill rates and alternates
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