Does Alloy assume franchisees will purchase real property for their Facility location?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
larger, the cost to finish will also be higher. Our estimates assumes that you will not purchase real property for your Facility location, you will lease the premises for your Facility at between $17 - $65 per square foot and as part of your lease negotiation you and the landlord will agree that you will not begin to pay rent until at least the month that your Facility opens. Landlords may vary the base rental rate and charge rent based on a percentage of gross sales. In addition to base rent, your lease may require you to pay common area maintenance charges ("CAM Charges") for your pro rata share of the real estate taxes and insurance, and your pro rata share of other charges. The $65 per square foot rate includes CAM Charges, taxes and insurance. The actual amount you pay under the lease will vary depending on the size of the Facility, the types of charges that are allocated to tenants under the lease, your ability to negotiate with landlords and the prevailing rental rates in the geographic region. Location is a major factor in the amount of rent required. We recommend different membership pricing tiers when calculating rent factors to account for high rent districts in certain parts of the country. We are unable to estimate with any precision the costs of leasing or purchasing real estate because of the wide variation from region to region and between markets. If you choose to purchase real property on which to build your Facility, your initial investment will probably be higher than what we estimate above. If you purchase real property, we cannot estimate how this pur
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 20–25)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the company does not assume that franchisees will purchase real property for their Facility location. Alloy estimates that franchisees will lease premises for their Facility at between $17 and $65 per square foot. Alloy also assumes that as part of the lease negotiation, the franchisee and the landlord will agree that the franchisee will not begin to pay rent until at least the month that their Facility opens.
However, the document does state that if a franchisee chooses to purchase real property on which to build their Facility, their initial investment will probably be higher than what Alloy estimates. The document also states that Alloy is unable to estimate with any precision the costs of leasing or purchasing real estate because of the wide variation from region to region and between markets. Location is a major factor in the amount of rent required, and Alloy recommends different membership pricing tiers when calculating rent factors to account for high rent districts in certain parts of the country.
For a prospective Alloy franchisee, this means that the initial investment estimates provided by Alloy are based on leasing a location rather than purchasing property. If a franchisee is considering purchasing real estate, they should be aware that their initial investment could be significantly higher, and Alloy cannot provide a precise estimate of those costs due to market variations. It would be prudent for potential franchisees to conduct thorough market research and consult with real estate professionals to assess the feasibility and costs associated with purchasing property in their desired location.