Does Alloy or its affiliates have the right to issue franchises or operate competing businesses at any other location?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
You acknowledge and agree that we and our affiliates have the right to operate and franchise others the right to operate facilities or any other business within and outside the Development Territory under trademarks other than the ALLOY Trademarks, without compensation to any franchisee, except that our operation of, or association or affiliation with, facilities (through franchising or otherwise) in the Development Territory that compete with ALLOY facilities will only occur through some form of merger or acquisition with an existing facility or retail chain business. Outside of the Development Territory, we and our affiliates have the right to grant other franchises or develop and operate company or affiliate owned ALLOY facilities and offer, sell or distribute any products or services associated with the System (now or in the future) and under the Trademarks or any other trademarks, service marks or trade names or through any distribution channel or method, all without compensation to any franchisee.
We and our affiliates have the right to offer, sell or distribute, within and outside the Development Territory, any services or products associated with the System (now or in the future) or identified by the Trademarks, or any other trademarks, service marks or trade names, through any distribution channels or methods, without compensation to any franchisee. The distribution channels or methods ("Alternative Methods of Distribution") include, without limitation, the internet (or any other existing or future form of electronic commerce).
You acknowledge and agree that certain locations within the Development Territory are by their nature unique and separate in character from sites generally developed as facilities. As a result, you agree that the following captive market locations ("Special Sites") are excluded from the Development Territory and we have the right to develop or franchise such locations: (1) military bases; (2) public transportation facilities (including airports); (3) business or industry locations (e.g. manufacturing site, office building), or sports facilities; (4) student unions or other similar buildings on college or university campuses; (5) malls or enclosed shopping centers; and (6) community and special events.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, Alloy and its affiliates retain the right to operate and franchise businesses both within and outside a franchisee's Development Territory under trademarks other than the Alloy trademarks. This means that while a franchisee may have certain development rights within their territory, Alloy is not restricted from expanding its brand or other brands it owns elsewhere, without providing compensation to the franchisee. The only exception is that Alloy's operation of competing facilities within the Development Territory will only occur through some form of merger or acquisition with an existing facility or retail chain business.
Specifically, Alloy can establish or license others to establish franchised, company-owned, or affiliate-owned facilities at any location, regardless of proximity to a franchisee's designated area. Alloy also retains the right to engage in merger or acquisition activity with any businesses, even those competing with Alloy, and these businesses may convert to or operate under Alloy's trademarks. Furthermore, Alloy can sell and distribute services and products, even those similar to what franchisees offer, under different trademarks through any distribution method.
Certain locations, termed "Special Sites," are excluded from the Development Territory, allowing Alloy to develop or franchise these locations. These Special Sites include military bases, public transportation facilities, business or industry locations, sports facilities, student unions, malls, and community events. Alloy and its affiliates can also distribute any services or products associated with the Alloy system through any distribution channels, including the internet, without compensating franchisees. This extensive reservation of rights means that Alloy franchisees operate with limited territorial protection and face potential competition from both Alloy and other entities affiliated with Alloy.