What is the dependency between the Development Agreement and the individual Franchise Agreements for Alloy facilities?

According to Alloy's 2025 Franchise Disclosure Document, each Franchise Agreement for an Alloy facility operates independently of the Development Agreement. The Development Agreement outlines the franchisee's obligation to open multiple Alloy facilities according to a specific schedule, but the terms and conditions of each individual Franchise Agreement dictate the operation of that specific facility.

Alloy emphasizes that the continuation of each Franchise Agreement is determined solely by its own terms. This means that the performance or status of one franchised location does not directly impact the standing of another, and each location is evaluated on its own merits under its respective agreement. However, franchisees must meet Alloy's standards to develop a new facility, including financial capability, and must not be in default of any agreements with Alloy.

Upon the termination or expiration of the Development Agreement, any rights to develop further Alloy facilities are revoked, but existing Franchise Agreements remain in effect, provided they have not been terminated. This separation ensures that franchisees can continue operating existing locations under their Franchise Agreements even if the Development Agreement concludes. Alloy retains the right to franchise others in the development territory if the Development Agreement expires or is terminated, except as provided under any existing Franchise Agreements.

Prospective Alloy franchisees should understand that while the Development Agreement sets forth the schedule and obligations for opening multiple locations, the individual Franchise Agreements govern the day-to-day operations and continued existence of each Alloy facility. Franchisees should carefully review the terms of both agreements to fully understand their rights and obligations.