Besides the amendment regarding the Development Fee, how should the Alloy Area Development Agreement be construed and enforced?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
cated. This provision may not be enforceable under California law.
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- Any provision of a franchise agreement, franchise disclosure document, acknowledgement, questionnaire, or other writing, including any exhibit thereto, disclaiming or denying any of the following shall be deemed contrary to public policy and shall be void and unenforceable:
- (a) Representations made by the franchisor or its personnel or agents to a prospective franchisee.
- (b) Reliance by a franchisee on any representations made by the franchisor or its personnel or agents.
- (c) Reliance by a franchisee on the franchise disclosure document, including any exhibit thereto.
- (d) Violations of any provision of this division.
- In all other respects, the Franchise Agreement will be construed and enforced according to its terms.
FRANCHISOR: Alloy Personal Training, LLC FRANCHISEE:
ADDENDUM TO THE AREA DEVELOPMENT AGREEMENT REQUIRED FOR THE STATE OF CALIFORNIA
This Addendum pertains to franchises sold in the State of California and is for the purpose of complying with California statutes and regulations. Notwithstanding anything which may be contained in the body of the Area Development Agreement to the contrary, the Agreement is amended as follows:
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- California Business and Professions Code Sections 20000 through 20043, the California Franchise Relations Act, provide rights to the franchisee concerning termination, transfer or non-renewal of a franchise. If the area development agreement contains a provision that is inconsistent with the law, the law will control.
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- In all other respects, the Area Development Agreement will be construed and enforced according to its terms.
FRANCHISOR: Alloy Personal Training, LLC DEVELOPER:
ILLINOIS ADDENDUM TO FRANCHISE DISCLOSURE DOCUMENT
The following applies to franchises and franchisees subject to Illinois statutes and regulations:
Item 5: Due to the financial condition of the Franchisor, the Illinois Attorney General's Office has required a financial assurance. Therefore, we have posted a surety bond which is on file with the Illinois Attorney General's Office. A copy of the surety bond is attached as an exhibit to the Illinois addenda pages.
Illinois law governs the Franchise Agreement.
In conformance with Section 4 of the Illinois Franchise Disclosure Act, 815 ILCS 705/1-44 (West 2016), any provision in a franchise agreement that designates jurisdiction or venue outside the State of Illinois is void. However, a franchise agreement may provide for arbitration to take place outside of Illinois.
Your rights upon termination and non-renewal are set forth in sections 19 and 20 of the Illinois Franchise Disclosure Act.
In conformance with Section 41 of the Illinois Franchise Disclosure Act, any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.
No disclaimer, questionnaire, clause, or statement signed by a franchisee in connection with the commencement of the franchise relationship shall be construed or interpreted as waiving any claim of fraud in the inducement, whether common law or statutory, or as disclaiming reliance on or the right to rely upon any statement made or information provided by any franchisor, broker or other person acting on behalf of the franchisor that was a material inducement to a franchisee's investment. This provision supersedes any other or inconsistent term of any document executed in connection with the franchise.
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ADDENDUM TO THE FRANCHISE AGREEMENT REQUIRED FOR ILLINOIS FRANCHISEES
This Addendum pertains to franchises sold in the State of Illinois and is for the purpose of complying with Illinois statutes and regulations. Notwithstanding anything which may be contained in the body of the Franchise Agreement to the contrary, the Agreement is amended as follows:
- The following sentence is hereby added to the end of Section 9.A, Initial Franchise Fee:
Due to the financial condition of the Franchisor, the Illinois Attorney General's Office has required a financial assurance. Therefore, we have posted a surety bond which is on file with the Illinois Attorney General's Office. A copy of the surety bond is attached as an exhibit to the Illinois addenda pages.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to the 2025 FDD, the Alloy Area Development Agreement is generally construed and enforced according to its original terms, except where specifically amended by addenda for certain states like California, Illinois, Minnesota, South Dakota, and Virginia. These addenda address specific state regulations and may modify provisions related to financial assurances, termination rights, venue for legal actions, and waivers of rights. Therefore, prospective Alloy area developers need to be aware of the specific addendum applicable to their state.
For instance, in California, the California Franchise Relations Act takes precedence over any inconsistent provisions in the area development agreement regarding termination, transfer, or non-renewal. In Illinois, any provision designating jurisdiction or venue outside of Illinois is void, although arbitration outside the state may be allowed. Additionally, Illinois franchisees cannot be forced to waive compliance with the Illinois Franchise Disclosure Act. Minnesota law provides franchisees with specific termination and nonrenewal rights, requiring 90 days' notice of termination (with 60 days to cure) and 180 days' notice for nonrenewal, and litigation cannot be required outside Minnesota.
In Virginia, the initial franchise fee and other initial payments may be deferred until Alloy has completed its pre-opening obligations. Furthermore, Alloy cannot cancel a franchise without reasonable cause, as defined by the Virginia Retail Franchising Act. In South Dakota, all initial fees and payments are deferred until Alloy completes its pre-opening obligations. These state-specific addenda highlight the importance of understanding the legal landscape in the state where the Alloy franchise will operate, as these laws can significantly impact the franchisee's rights and obligations.
Beyond these state-specific amendments, Alloy also requires area developers to adhere to several conditions to maintain their development rights. These include submitting franchise applications and financial statements, meeting Alloy's standards for franchisees, remaining in good standing with all agreements, and executing Alloy's current form of Franchise Agreement. Alloy may modify the Franchise Agreement over time, potentially imposing different or higher fees and obligations. Each Franchise Agreement exists independently of the Area Development Agreement, with its continued existence determined by its own terms and conditions. Therefore, compliance with the Development Schedule is critical, as failure to meet deadlines for executing Franchise Agreements or opening facilities can result in termination of the Area Development Agreement.