What is the Alloy franchisee's responsibility to use only Alloy's proprietary products?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
We reserve the right to develop proprietary products that are manufactured according to our specifications. Because of the importance of quality and uniformity of production and the significance of those products in the System, it is to your and our benefit that we closely control the production and distribution of those products. Therefore, you will use only our proprietary products and will purchase those items only from us, our affiliate or from the supplier we designate.
Except for those items where we have approved a sole supplier, if you wish to purchase, lease or use any products or other items, or you wish to purchase from an unapproved supplier, you must submit a written request for approval, or must request the supplier to do so. We must approve any product or supplier in writing before you make any purchases of that product or from that supplier. We can require that our representatives be permitted to inspect the supplier's facilities and that samples from the supplier be delivered either to us or to an independent laboratory for testing. We reserve the right to re-inspect the facilities and products of any approved supplier and to revoke our approval if the supplier fails to continue to meet any of our then-current
standards. Our supplier approval procedure does not obligate us to approve any particular supplier, and in certain circumstances we may designated a supplier as a sole supplier or one of two or three approved suppliers. We will notify you within six months after we complete the inspection and evaluation process of our approval or disapproval of any proposed supplier. We are not required to make available to you or to any supplier the criteria for product or supplier approval that we deem confidential. You must reimburse all costs we incur related to evaluating a product or supplier that you propose, up to a maximum of $5,000 per request. We may also revoke approval of a particular product or supplier. If we notify you in writing that our approval has been revoked, you must stop purchasing that product and/or stop purchasing from that supplier.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 25–29)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, franchisees are required to use only Alloy's proprietary products, purchasing them exclusively from Alloy, its affiliates, or designated suppliers. This requirement is in place to maintain quality and uniformity across the Alloy system. Alloy retains the right to develop proprietary products manufactured to their specifications, emphasizing the importance of closely controlling their production and distribution for the benefit of both the franchisee and the franchisor.
If a franchisee wishes to use a product or supplier not already approved, they must submit a written request for approval. Alloy can require inspection of the supplier's facilities and testing of product samples, with the franchisee bearing the costs of evaluation, up to $5,000 per request. Alloy will notify the franchisee of the approval or disapproval within six months of completing the inspection and evaluation process. Alloy also reserves the right to revoke approval of a product or supplier, at which point the franchisee must cease purchasing from them.
This policy ensures that Alloy franchisees maintain consistent standards and quality, but it also limits their autonomy in sourcing products. Franchisees should be aware of these restrictions and the potential costs associated with seeking approval for new products or suppliers. It is common in franchising to have restrictions on sourcing to maintain brand standards, but the specific procedures and costs for approval can vary significantly.