What benefits do purchase arrangements negotiated by Alloy include for Alloy franchisees?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
icers has an ownership interest in any approved supplier.
We may, when appropriate, negotiate purchase arrangements, including price terms, with designated and approved suppliers on behalf of the System. These arrangements will include certain benefits to franchisees like having available sources of supply on a regular basis and may, with certain applied suppliers but not all suppliers, include negotiated price terms for the franchisees' benefit. At the present time there are no purchasing or distribution cooperatives established by us. We do not give you any benefits, like renewal or the granting of additional franchises, based on your buying any items from our approved suppliers.
We may establish strategic alliances or preferred vendor programs with suppliers that are willing to supply some products, equipment, or services to some or all of the centers in our system. If we do establish those types of alliances or programs, we may limit the number of approved suppliers with whom you may deal, we may designate sources that you must use for some or all products, equipment and services, and we may refuse to approve proposals from franchisees to add new suppliers if we believe that approval would not be in the best interests of the System.
We have the right to collect and retain any and all allowances, rebates, credits, incentives, or benefits (collectively, "Allowances") offered by manufacturers, suppliers, and distributors to you, to us, or to our affiliates based upon your purchases of products and services from manufacturers, suppliers, and distributors. We or our affiliates will have all of your right, title, and interest in and to any and all of these Allowances. We or our affiliates may collect and retain any or all of these Allowances without restriction (unless otherwise instructed by the manufacturer, supplier, or distributor). We may also choose to contribute these Allowances to the Brand Development Fund, but if we do so it does not reduce or eliminate your requirement to pay the
Brand Development Fee. For the fiscal year ended December 31, 2024, we collected $221,972 in Allowances, which was 5.48% of our overall revenue of $4,048,688, as reported in our audited financial sta
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 25–29)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, Alloy may negotiate purchase arrangements with approved suppliers, potentially benefiting franchisees. These benefits include having regular sources of supply and, with some but not all suppliers, negotiated price terms. However, Alloy does not provide additional benefits like renewal options or additional franchises based on franchisees purchasing from approved suppliers.
Alloy may also establish strategic alliances or preferred vendor programs, potentially limiting the number of approved suppliers a franchisee can use or designating specific sources for products, equipment, and services. Alloy retains the right to collect and keep allowances, rebates, credits, incentives, or benefits from suppliers based on franchisee purchases. For the fiscal year ended December 31, 2024, Alloy collected $221,972 in Allowances, which was 5.48% of their overall revenue of $4,048,688.
This means that while Alloy franchisees may benefit from pre-negotiated pricing and reliable supply chains, they are also subject to restrictions on where they can source goods and services. Alloy retains the financial benefits (Allowances) derived from franchisee purchases, which may impact the franchisee's profitability. Prospective franchisees should consider these factors when evaluating the overall financial implications of the franchise.