Does the Alloy Development Agreement require a separate Franchise Agreement for each Facility?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
in this Agreement, you must pay us a "Development Fee" in the amount designated on the Data Sheet. The Development Fee is consideration for this Agreement and not consideration for any Franchise Agreement, is fully earned by us upon receipt and is nonrefundable.
- B. You must submit a separate application for each Facility to be established by you within the Development Territory as further described in Section 4. Upon our consent to the site of your Facility, a separate Franchise Agreement must be executed for each such Facility. Upon the execution of each Franchise Agreement, the terms and conditions of the Franchise Agreement
control the establishment and operation of such Facility. You must execute the Franchise Agreement for the first Facility to be developed hereunder simultaneously with the execution of this Agreement.
DEVELOPMENT SCHEDULE
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- The following provisions control with respect to your development rights and obligations:
- A. You are bound by and strictly must follow the Development Schedule.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the Development Agreement mandates a separate Franchise Agreement for each Alloy facility to be established within the Development Territory. The Development Agreement itself does not grant the right to use Alloy's trademarks or operate an Alloy facility. Instead, it outlines the developer's rights and obligations to open multiple Alloy locations according to a Development Schedule.
Specifically, the franchisee must submit a separate application for each facility and, upon Alloy's approval of the site, execute a separate Franchise Agreement for each location. The terms and conditions of each Franchise Agreement will then govern the establishment and operation of that specific facility. The franchisee must execute the Franchise Agreement for the first facility simultaneously with the execution of the Development Agreement.
This requirement ensures that each Alloy location operates under its own set of terms and conditions, allowing Alloy to maintain control over the standards and operations of each individual facility. It also allows Alloy to modify the Franchise Agreement over time, potentially imposing different and higher fees and obligations for future locations. The franchisee is obligated to adhere to the Development Schedule, opening facilities as agreed upon, regardless of increased investment requirements or the financial performance of existing facilities.
Furthermore, the FDD states that each Franchise Agreement exists independently of the Development Agreement, and its continued existence is determined solely by its own terms and conditions. This means that the performance and status of one franchise location do not directly impact the other locations or the overall Development Agreement, providing both Alloy and the franchisee with a degree of separation and individual accountability for each facility.