Does the Alloy franchise agreement require the franchisee to hold Alloy harmless from Franchise Claims?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
Due to the financial condition of the Franchisor, the Minnesota Department of Commerce has required a financial assurance. Therefore, we have posted a surety bond which is on file with the State of Minnesota. A copy of the surety bond is attached as an exhibit to the Minnesota addenda pages.
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- No release language set forth in the Franchise Agreement shall relieve Franchisor or any other person, directly or indirectly, from liability imposed by the laws concerning franchising of the State of Minnesota, provided, that this part will not bar the voluntary settlement of disputes.
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- No disclaimer, questionnaire, clause, or statement signed by a franchisee in connection with the commencement of the franchise relationship shall be construed or interpreted as waiving any claim of fraud in the inducement, whether common law or statutory, or as disclaiming reliance on or the right to rely upon any statement made or information provided by any franchisor, broker or other person acting on behalf of the franchisor that was a material inducement to a franchisee's investment. This provision supersedes any other or inconsistent term of any document executed in connection with the franchise.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
Based on the 2025 Alloy Franchise Disclosure Document excerpts, it's not possible to determine definitively whether the standard franchise agreement requires franchisees to hold Alloy harmless from franchise claims. However, the Minnesota Addendum to the Franchise Agreement includes provisions that modify certain aspects of the agreement to comply with Minnesota law. Specifically, it states that 'No release language set forth in the Franchise Agreement shall relieve Franchisor or any other person, directly or indirectly, from liability imposed by the laws concerning franchising of the State of Minnesota, provided, that this part will not bar the voluntary settlement of disputes.' This suggests the standard agreement might contain release language, but this addendum prevents it from releasing Alloy from liability under Minnesota franchise laws.
Similarly, the Illinois Addendum includes a provision stating that an Acknowledgment Addendum attached to the Area Development Agreement (and specifically stating that it is not for use in the State of Illinois) is unenforceable under Illinois law because it may have the effect of forcing a franchisee to waive or release certain rights that you as a franchisee have under the Illinois Franchise Disclosure Act. This further suggests that Alloy's standard agreements may contain clauses that could be interpreted as franchisees waiving certain rights or releasing Alloy from certain liabilities, but that these clauses are modified by state-specific addenda to comply with local laws.
To fully understand the obligations and liabilities, a prospective franchisee should carefully review the entire Franchise Agreement, including all addenda specific to their state. They should also consult with a franchise attorney to clarify whether any clauses in the agreement could be interpreted as requiring them to hold Alloy harmless from specific types of claims, and whether such clauses are enforceable in their state.