Who bears the expense of the additional on-site training and assistance required after an Alloy franchisee fails to achieve the minimum annual Gross Sales?

According to Alloy's 2025 Franchise Disclosure Document, if a franchisee fails to achieve the minimum annual Gross Sales for the first time, they are required to receive additional on-site training and assistance from Alloy representatives. The franchisee is responsible for covering these expenses, which include Alloy's current per diem fee and reimbursement for the representative's expenses.

If the Alloy franchisee fails to meet the minimum annual Gross Sales a second time, Alloy may again require the franchisee to receive additional on-site training and assistance. Should the franchisee fail to achieve the minimum annual Gross Sales for a third time, Alloy has the right to terminate the Franchise Agreement without providing an opportunity to correct the default. In addition to covering the costs of training, the franchisee must also compensate Alloy for any shortfall in royalty fees resulting from not meeting the minimum sales requirements.

The minimum annual Gross Sales required to retain territorial rights are $240,000 in Year 1 and $300,000 in Year 2 and each subsequent year of operation through the initial term of the Franchise Agreement. This requirement underscores the importance of meeting sales targets to avoid additional expenses and potential termination of the franchise agreement.

This policy is fairly standard in franchising, as franchisors want to ensure franchisees are operating effectively. By making the franchisee responsible for the costs of additional training, Alloy incentivizes franchisees to meet their sales goals and take proactive measures to improve their business performance.