What additional payment is required from an Alloy franchisee for each failure to achieve the minimum annual Gross Sales?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
If you fail to achieve the minimum annual Gross Sales a first time, you must receive additional on-site training and assistance from one of our representatives, at your expense (including payment of our then-current per diem fee plus reimbursement of our representative's expenses). If you fail to achieve the minimum annual Gross Sales a second time, we may again require you to receive additional on-site training and assistance. If you fail to achieve the minimum annual Gross Sales a third time, we may terminate your Franchise Agreement without giving you the opportunity to cure the default. You must pay any shortfall of royalty fees for each failure to achieve the minimum annual Gross Sales.
Source: Item 12 — TERRITORY (FDD pages 42–46)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, if a franchisee fails to meet the minimum annual Gross Sales, they must cover any shortfall of royalty fees. The FDD specifies that this payment is required for each failure to achieve the minimum sales target.
In addition to covering the royalty fee shortfall, the franchisee is also responsible for the costs associated with additional on-site training and assistance provided by Alloy representatives. This includes paying Alloy's per diem fee, as well as reimbursing the representative's expenses. This on-site support is mandatory after the first failure to meet the minimum sales, and Alloy may require it again after a second failure.
The minimum annual Gross Sales required to maintain territorial rights are $240,000 in the first year of operation and $300,000 for the second and subsequent years. Failure to meet these minimums can lead to required training and covering royalty fee shortfalls, and repeated failure can result in the termination of the Franchise Agreement.
Prospective franchisees should carefully consider these financial implications and ensure they have a solid business plan to meet the minimum sales requirements. Understanding the potential costs associated with failing to meet these targets is crucial for assessing the financial viability of an Alloy franchise.