Are the Brand Development Fund Fees for Alloy held in trust?

According to Alloy's 2025 Franchise Disclosure Document, the Brand Development Fund Fees are not held in trust. Instead, Alloy manages the Brand Development Fund, and while it is not a trust or escrow account, Alloy states that it will make a good faith effort to expend such fees in a manner that it determines is in the general best interests of the System. Alloy has the right to determine the expenditures of the amounts collected and the methods of marketing, advertising, and media employed.

This means that Alloy franchisees do not have direct control over how the Brand Development Fund is spent. Alloy has the discretion to use the funds for advertising, marketing, and promotional campaigns, including payments to Alloy for administering the fund, covering accounting expenses, and compensating employees involved in advertising functions. While Alloy commits to making a good faith effort to act in the best interest of the franchise system, the ultimate decision-making power rests with Alloy.

It's important for prospective Alloy franchisees to understand that the Brand Development Fund is not a trust or escrow account, which means it is not subject to the same legal protections as those types of accounts. If requested, Alloy will provide franchisees with an annual unaudited statement of the financial condition of the Fund. Franchisees may want to inquire about the historical uses of the Brand Development Fund and the criteria Alloy uses to determine how the funds are allocated to ensure they are comfortable with Alloy's approach.