What is the effect of the severability clause in the Alloy Franchise Agreement?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
Should one or more clauses of this Agreement be held void or unenforceable for any reason by any court of competent jurisdiction, such clause or clauses will be deemed to be separable in such jurisdiction and the remainder of this Agreement is valid and in full force and effect and the terms of this Agreement must be equitably adjusted so as to compensate the appropriate party for any consideration lost because of the elimination of such clause or clauses. It is the intent and expectation of each of the parties that each provision of this Agreement will be honored, carried out and enforced as written. Consequently, each of the parties agrees that any provision of this Agreement sought to be enforced in any proceeding must, at the election of the party seeking enforcement and notwithstanding the availability of an adequate remedy at law, be enforced by specific performance or any other equitable remedy.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the severability clause addresses the scenario where a court finds one or more provisions of the Franchise Agreement to be void or unenforceable. In such a case, the specific clause(s) in question will be treated as separable, but only within that particular jurisdiction. The remainder of the Franchise Agreement will remain valid and in full effect.
Furthermore, the severability clause dictates that the terms of the agreement must be equitably adjusted to compensate the appropriate party for any consideration lost due to the elimination of the voided clause(s). This adjustment aims to maintain the balance of the agreement as originally intended, even with the removal of certain provisions. Alloy states that it is the intent and expectation of each of the parties that each provision of this Agreement will be honored, carried out and enforced as written.
This clause also specifies that any provision of the Franchise Agreement sought to be enforced in any proceeding must, at the election of the party seeking enforcement, be enforced by specific performance or any other equitable remedy, regardless of whether an adequate remedy exists at law. This means that Alloy or the franchisee can seek court orders to compel compliance with the agreement's terms, rather than just monetary damages. This aspect could be particularly relevant for provisions concerning brand standards, operational requirements, or non-compete obligations, where monetary damages might not fully address the harm caused by a breach.