What are the consequences for an Alloy franchisee who fails to comply with the franchisor's instructions regarding the use of trademarks, as described in Item 13?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
If we or our Affiliate determine that you have used the Trademarks in accordance with this Agreement, the cost of the defense, including the cost of any judgment or settlement, will be borne by us or our Affiliate.
If we or our Affiliate determine that you have not used the Trademarks in accordance with this Agreement, the cost of the defense, including the cost of any judgment or settlement, will be yours.
What This Means (2025 FDD)
According to the 2025 Alloy FDD, if Alloy or its affiliate determines that a franchisee has not used the trademarks in accordance with the Franchise Agreement, the franchisee will bear the cost of defending any third-party claim, suit, or demand arising from their use of the trademarks. This includes the cost of any judgment or settlement. This allocation of costs highlights the importance of adhering to Alloy's trademark usage guidelines.
This means that franchisees must strictly follow Alloy's guidelines when using the Alloy trademarks on any materials, including business cards, stationery, and signs. These guidelines include accurately depicting the trademarks as prescribed by Alloy, indicating that the business is independently owned and operated, and refraining from using the trademarks in conjunction with any other trademarks without prior written approval from Alloy. Franchisees must also make copies of any materials depicting the trademarks available to Alloy upon request.
Furthermore, franchisees are required to post a prominent sign in their facility identifying themselves as an Alloy franchisee in a format deemed reasonably acceptable by Alloy. This includes acknowledging that they independently own and operate the facility and that the Alloy trademark is owned by Alloy and used under license. All internal and external signs must comply with Alloy's outdoor/indoor guidelines and practices, as modified from time to time.
In the event of any improper use or infringement of the trademarks by another party, the franchisee must promptly notify Alloy. Alloy retains the sole right to direct and control any administrative proceeding or litigation involving the trademarks, including any settlement. While Alloy has the right, but not the obligation, to take action against uses by others that may infringe upon the trademarks, the financial responsibility for defending against claims arising from improper trademark use falls on the franchisee if they have not adhered to the agreement.