What is the consideration for the rights granted to the Alloy franchisee during the term of the agreement?

According to Alloy's 2025 Franchise Disclosure Document, the consideration for the rights granted to the franchisee under the Development Agreement is the Development Fee. The franchisee must pay Alloy the Development Fee in the amount designated on the Data Sheet. This fee is for the rights granted in the Development Agreement itself and not for any future Franchise Agreements. Alloy considers the Development Fee fully earned upon receipt and it is nonrefundable.

This means that a prospective Alloy franchisee must pay the Development Fee to secure the rights to develop Alloy facilities within a specific territory. This fee compensates Alloy for granting the franchisee the exclusive right to develop within that area, subject to the terms and conditions of the Development Agreement. The franchisee's rights are tied to adhering to the Development Schedule, which outlines the timeline for opening Alloy facilities.

It's important to note that the Development Fee is separate from any fees associated with individual Franchise Agreements for each Alloy facility. The Development Agreement gives the franchisee the right to develop, but each facility requires its own Franchise Agreement. If the franchisee fails to meet the Development Schedule, Alloy has the right to terminate the Development Agreement. This highlights the importance of carefully reviewing the Development Schedule and ensuring that the franchisee has the resources and capabilities to meet the required milestones.

Prospective franchisees should carefully consider the amount of the Development Fee, as it is nonrefundable, and evaluate their ability to comply with the Development Schedule before entering into the Development Agreement with Alloy. They should also understand the distinction between the Development Agreement and the Franchise Agreements for individual facilities, as each carries its own set of obligations and fees.