For Alloy franchisees, what is the brand fund used for?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
. Pursuant to the shared-services arrangement, the Company was allocated $384,246 of shared-services costs for the year ended December 31, 2022, which are included in "Selling, general and administrative expenses" in the accompanying statements of operations and members' deficit.
Beginning January 2023, the Company began to provide certain services previously provided by Alloy. For these services, the Company allocated $33,610 and $45,804 of such costs to Alloy for the years ended December 31, 2024 and 2023, respectively, which are recognized as "Members' distributions" in the accompanying statement of operations and members' deficit.
**NOTE 9. BRAND
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the brand fund, which franchisees contribute to at a rate of 2% of their reported sales, is primarily used for advertising and related expenses. These expenses are intended to benefit all Alloy franchisees. The company has the discretion to allocate a portion of the fund to offset its administrative costs associated with managing the fund.
The Alloy FDD specifies that the company will make a good faith effort to expend the fees in a manner that it determines is in the general best interests of the Alloy system. This includes the right to determine the expenditures of the amounts collected and the methods of marketing, advertising, media employed, and contents, terms, and conditions of marketing campaigns and promotional programs. The company is not required to spend a prorated amount on each facility or in each advertising market.
Disbursements from the fund may cover expenses related to formulating, developing, and implementing marketing, advertising, and promotional campaigns. These disbursements can also include payments to Alloy for the expense of administering the fund, such as accounting expenses and salaries and benefits paid to employees engaged in advertising functions. Franchisees can request an annual unaudited statement of the financial condition of the fund.