Can Alloy or its affiliates establish another Franchised Business within an Alloy franchisee's Designated Area?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
The Franchise Agreement grants you the right to operate your Franchised Business only at the location we approve ("Authorized Location"). You will not receive an exclusive territory. You may face competition from other franchisees, from outlets we own, or from other channels of distribution or competitive brands that we control. However, we will grant you a protected area, which will be described in an exhibit to your Franchise Agreement ("Designated Area"). If your Designated Area is located in a suburban area, your Designated Area will include a population of at least 30,000 people, which for most suburban areas will cover a radius of approximately 2 miles from the Authorized Location (taking into account any geographic factors like rivers or other similar natural boundaries). We reserve the right to create a more limited Designated Area for Facilities located in densely populated areas but your Designated Area will have a population of at least 30,000 people. Your Designated Area may be described in terms of street boundaries or may be drawn on a map to be attached to your Franchise Agreement. We (and any affiliates) will not establish, nor allow another franchise owner to establish, another Franchised Business located within your Designated Area, although in certain instances there may be overlap of Designated Area boundaries of two franchisees. We do not anticipate permitting franchisees to establish
Facilities at captive market locations, such as a shopping mall, office building, or similar location. There are no circumstances under which we can modify the boundaries of your Designated Area during the term of your Franchise Agreement.
Source: Item 12 — TERRITORY (FDD pages 42–46)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, franchisees are granted a protected Designated Area. Alloy states that it (and any affiliates) will not establish, nor allow another franchise owner to establish, another Franchised Business located within a franchisee's Designated Area. However, the FDD also notes that in certain instances there may be overlap of Designated Area boundaries of two franchisees. Alloy does not anticipate permitting franchisees to establish Facilities at captive market locations, such as a shopping mall, office building, or similar location.
However, Alloy retains significant rights outside of this protected area. Alloy and its affiliates can sell products or offer services under the Proprietary Marks within and outside a franchisee's Designated Territory through alternative distribution channels, such as the internet, catalog sales, or telemarketing. The franchisee will not receive any compensation for these sales, even if the order originated from or was delivered to an address in their Designated Territory. Alloy also has the right to establish and operate, and grant rights to other franchise owners to establish and operate, Facilities or similar businesses at any locations outside a franchisee's Designated Territory and on any terms and conditions Alloy deems appropriate.
Alloy also retains the right to engage in Merger/Acquisition Activity with any businesses or facilities of any kind (including those in competition with Alloy) under other systems and/or marks, which businesses and facilities may convert to or operate under the Marks and may offer or sell training services or related products that are the same as or similar to the services or products offered at or from the Franchised Business, and which may be located anywhere. Alloy also has the right to develop or franchise Special Site locations, which by their nature are unique and separate in character from sites generally developed as Alloy facilities, regardless of their location and their proximity to a franchisee's Facility. These Special Sites include military bases, public transportation facilities, business or industry locations, sports facilities, student unions, malls, and community and special events.
For franchisees entering into an Area Development Agreement, Alloy provides a Development Territory, but it is not exclusive. Franchisees may face competition from other franchisees, from outlets Alloy owns, or from other channels of distribution or competitive brands that Alloy controls. However, if the franchisee meets the Minimum Performance Schedule and complies with the Area Development Agreement and Franchise Agreement, Alloy will not establish or license others to establish a Facility within the Development Territory assigned to the franchisee. However, once the franchisee has signed a lease for the last Facility to be developed within the Development Territory, Alloy and its affiliates have the right to operate and to grant to others development rights and franchises to develop and operate Facilities within the Development Territory, subject only to the territorial rights under the franchisee's franchise agreements for Facilities in the Development Territory.