Does the Alloy Franchise Agreement specify that the franchisor's rights are absolute?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
This Addendum pertains to franchises sold in the State of California and is for the purpose of complying with California statutes and regulations. Notwithstanding anything which may be contained in the body of the Area Development Agreement to the contrary, the Agreement is amended as follows:
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- California Business and Professions Code Sections 20000 through 20043, the California Franchise Relations Act, provide rights to the franchisee concerning termination, transfer or non-renewal of a franchise. If the area development agreement contains a provision that is inconsistent with the law, the law will control.
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- In all other respects, the Area Development Agreement will be construed and enforced according to its terms.
FRANCHISOR: Alloy Personal Training, LLC DEVELOPER:
ILLINOIS ADDENDUM TO FRANCHISE DISCLOSURE DOCUMENT
The following applies to franchises and franchisees subject to Illinois statutes and regulations:
Item 5: Due to the financial condition of the Franchisor, the Illinois Attorney General's Office has required a financial assurance. Therefore, we have posted a surety bond which is on file with the Illinois Attorney General's Office. A copy of the surety bond is attached as an exhibit to the Illinois addenda pages.
Illinois law governs the Franchise Agreement.
In conformance with Section 4 of the Illinois Franchise Disclosure Act, 815 ILCS 705/1-44 (West 2016), any provision in a franchise agreement that designates jurisdiction or venue outside the State of Illinois is void. However, a franchise agreement may provide for arbitration to take place outside of Illinois.
Your rights upon termination and non-renewal are set forth in sections 19 and 20 of the Illinois Franchise Disclosure Act.
In conformance with Section 41 of the Illinois Franchise Disclosure Act, any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.
This Addendum pertains to franchises sold in the State of Minnesota and is for the purpose of complying with Minnesota statutes and regulations. Notwithstanding anything which may be contained in the body of the Area Development Agreement to the contrary, the Agreement is amended as follows:
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- Franchisor will undertake the defense of any claim of infringement by third parties involving the ALLOY Mark and Developer will cooperate with the defense in any reasonable manner prescribed by Franchisor with any direct cost of such cooperation to be borne by Franchisor.
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- Minnesota law provides franchisees with certain termination and nonrenewal rights. As of the date of this Area Development Agreement, Minn. Stat. Sec. 80C.14, Subd. 3, 4 and 5 require, except in certain specified cases, that a franchisee be given 90 days notice of termination (with 60 days to cure) and 180 days notice for nonrenewal of the Area Development Agreement.
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- Nothing in the Area Development Agreement can abrogate or reduce any of Developer's rights as provided for in Minnesota Statutes, Chapter 80C, or Developer's rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction. In addition, Minn. Stat.§ 80C.21 and Minn. rule 2860.4400J prohibit Franchisor from requiring litigation to be conducted outside Minnesota.
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- Minnesota Rule 2860.4400D prohibits Franchisors from requiring franchisees to assent to a general release. The Area Development Agreement is modified accordingly, to the extent required by Minnesota law.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
Based on the 2025 Alloy Franchise Disclosure Document, the franchisor's rights are not absolute, particularly in certain states where franchise laws provide franchisees with specific protections. For example, addenda for California and Minnesota franchises explicitly state that state laws provide rights to franchisees concerning termination, transfer, or non-renewal, and that the area development agreement is amended to comply with these statutes and regulations. These addenda emphasize that if any provision in the agreement is inconsistent with state law, the law will take precedence. This suggests that Alloy's rights as a franchisor are subject to these legal limitations.
Furthermore, the Illinois addendum also highlights similar protections, noting that Illinois law governs the Franchise Agreement and that certain provisions, such as those designating jurisdiction or venue outside of Illinois, are void. The Illinois Franchise Disclosure Act ensures that franchisees cannot waive compliance with Illinois law, further limiting the franchisor's control. These state-specific addenda collectively indicate that Alloy's rights are not absolute and are constrained by the legal framework established in these states to protect franchisees.
In Minnesota, the addendum to the Franchise Agreement specifies that Alloy will defend against infringement claims involving the Alloy Trademark and that franchisees have certain termination and nonrenewal rights as provided by Minnesota law. The agreement also states that nothing within it can reduce a developer's rights under Minnesota Statutes, Chapter 80C, including rights to procedures, forums, or remedies provided by law. These provisions reinforce the idea that Alloy's rights are balanced against the legal rights afforded to franchisees, ensuring a degree of protection and recourse for the franchisee. Therefore, prospective franchisees should carefully review the addenda applicable to their state to understand the specific legal protections in place.