Key Factors to Consider
Three criteria decide whether a supply arrangement is worth signing, and they should be scored in this order: all-in delivered cost per unit across the full term, control terms (who owns the buying entity, who receives rebates, what exclusivity or termination rights exist), and verifiable evidence that the live option matches the offer. The criteria and figures in this section are the ones that decide the commitment.
Scale matters when you set your own tolerance for deviations. Nation’s Restaurant News reported that the former CEO of Subway’s purchasing co-op was indicted in an alleged $80 million bribery scheme; WPEC separately reported South Florida siblings charged in an alleged $80 million Subway franchise kickback scheme. The Justice Department and FBI described a former corporate executive indicted for fraud and money laundering involving over $230 million in purchases, alleging he accepted bribes to direct company business to specific suppliers. Automotive News reported a federal grand jury indicted a former GM purchasing executive for allegedly diverting $80 million from GM. Use those as scale references for exposure, not as benchmarks for your own deal.
The number you actually compute is total cost over the term: unit price multiplied by committed volume, plus freight and handling fees, minus rebates and allowances, plus any switching or exit cost. When a supplier quotes a rebate as a percentage, convert it to dollars and divide by the units you expect to buy — that gives you dollars per unit, which you can compare directly against a flat price. Recompute the sum twice, once with your volume estimate and once at a lower volume, because percentage rebates shrink when volume falls.
Verification means asking for documents dated now: the current contract version and its effective date, the current price sheet, the current ownership of the supplier, and the current rebate statement. Confirm that the entity named on the contract, the entity that invoices, and the entity that pays rebates are consistent. If they are not, treat the total as unverified until the paperwork reconciles.
Screen each candidate against the same three lines before you commit:
| Criterion | What to verify | Number to compute |
|---|---|---|
| All-in delivered cost | Current price sheet, freight, handling fees, minimum order | Unit price × volume, plus freight and fees, minus rebates |
| Control and terms | Ownership of buying entity, rebate recipient, exclusivity, termination notice | Share of volume committed versus share of rebate returned |
| Verifiable live option | Contract version and effective date, vendor list, ownership, references | Rebate dollars ÷ units purchased |
What to do next
| Step | Action | Why it matters |
|---|---|---|
| 1 | Define your specific needs and budget | Narrows options to what actually fits |
| 2 | Compare top 3 options side by side | Reveals the best value for your situation |
| 3 | Check current pricing and availability | Prices change frequently — verify before committing |
| 4 | Book directly with the provider | Often gets better terms than third parties |
| 5 | Set a reminder to review in 6 months | Policies and pricing shift — stay current |