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Running Your Business:
Driving Components in Prime Vendor Agreements
By Eric Hahn

Deciding whether a "prime vendor contract" is a wise choice in your purchasing process is something that confronts many operators today.

By definition, a "prime vendor contract" is a pricing mechanism that distributors offer to operators for the items they frequently buy. Generally, the distributor seeks to obtain a high percentage of the operator's purchasing power, in exchange for better or preferred pricing for key menu items. Like any contract, a prime vendor contract is a mutual agreement that is intended to benefit both parties.

Prime vendor contract pricing is formulated on the following criteria:

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