For Alloy franchises in South Dakota, when must the initial fees and payments be paid to Alloy?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
at any provision in any of the Contracts entered into by the parties are inconsistent with the Act, the provisions of the Act shall control. They furthermore expressly agree that Rhode Island law shall be applied to, and govern, any claim between the parties that alleges violation of the Act.
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- Except as amended herein, the Franchise Agreement will be construed and enforced in accordance with its terms.
Each of the undersigned hereby acknowledges having read and understood this Addendum and consents to be bound by all of its terms.
FRANCHISOR: Alloy Personal Training, LLC FRANCHISEE:
SOUTH DAKOTA ADDENDUM TO FRANCHISE DISCLOSURE DOCUMENT
The following applies to franchises and franchisees subject to South Dakota statutes and regulations:
Item 5: 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. In addition, all development fees and initial payments by area developers shall be deferred until the first Facility developed under the development agreement opens.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the timing of initial fees and payments for Alloy franchises in South Dakota is impacted by the franchisor's financial condition. Due to the financial condition of Alloy, the South Dakota Securities Regulation Office has mandated a financial assurance. As a result, all initial fees and payments owed by franchisees to Alloy under the franchise agreement are deferred. This deferral remains in effect until Alloy completes its pre-opening obligations as outlined in the franchise agreement.
This requirement also extends to area developers in South Dakota. All development fees and initial payments required from area developers are also deferred. These payments are not due until the first Alloy facility developed under the development agreement actually opens for business. This ensures that developers are not burdened with upfront costs until they are able to begin generating revenue from their first location.
This deferral of fees represents a significant benefit for franchisees and area developers in South Dakota, reducing the initial financial burden and risk associated with starting a new Alloy franchise. It also provides an incentive for Alloy to efficiently complete its pre-opening obligations, as the company will not receive these initial payments until these obligations are fulfilled. Prospective franchisees in South Dakota should carefully review the franchise agreement and related addenda to fully understand the specific pre-opening obligations and the timing of fee payments.