For Alloy franchises sold in South Dakota, what is the purpose of the addendum to the franchise agreement?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
This Addendum pertains to franchises sold in the State of South Dakota and is for the purpose of complying with South Dakota statutes and regulations. Notwithstanding anything which may be contained in the body of the Franchise Agreement to the contrary, the Agreement is amended as follows:
- The following sentence is hereby added to the end of Section 9.A, Initial Franchise Fee:
Due to the financial condition of the Franchisor, the South Dakota Securities Regulation Office has required a financial assurance. Therefore, all initial fees and payments owed by franchisees to the franchisor under a franchise agreement shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement.
- Except as amended herein, the Franchise Agreement will be construed and enforced in accordance with its terms.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the addendum to the franchise agreement for franchises sold in South Dakota is to comply with South Dakota statutes and regulations. This is explicitly stated in the document.
Specifically, due to Alloy's financial condition, the South Dakota Securities Regulation Office requires a financial assurance. To address this, the addendum stipulates that all initial fees and payments owed by franchisees to Alloy under the franchise agreement are deferred. This deferral lasts until Alloy completes its pre-opening obligations under the franchise agreement.
This addendum modifies Section 9.A of the franchise agreement, which covers the initial franchise fee, by adding a sentence that reflects the deferral of fees. Except for the changes explicitly outlined in the addendum, the original franchise agreement remains in full effect and is to be construed and enforced according to its original terms. This ensures that franchisees in South Dakota are protected given Alloy's current financial situation.