Does the Alloy Franchisor have any liability based on the lease addendum?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) Landlord further acknowledges that Tenant is not an agent or employee of Franchisor and the Tenant has no authority or power to act for, or to create any liability on behalf of, or to in any way bind Franchisor or any affiliate of Franchisor, and that Landlord has entered into this Addendum to Lease with full understanding that it creates no duties, obligations or liability of or against Franchisor or any affiliate of Franchisor, unless and until the Lease is assigned to, and accepted in writing by, Franchisor.
Upon the expiration or termination of the Lease, Landlord will cooperate with and assist Franchisor in gaining possession of the Premises and, if Franchisor does not elect to assume the Lease for the Premises consistent with paragraphs 3 or 4 above, Landlord will allow Franchisor to enter the Premises, without being guilty of trespass and without incurring any liability to Landlord except for any damages caused by Franchisor's willful misconduct or gross negligence, to remove all signs and all other items identifying the Premises as an ALLOY Facility and to make such other modifications (such as repainting) as are reasonably necessary to protect the ALLOY Marks and System, and to distinguish the Premises from ALLOY Facilities.
Franchisor shall pay, perform and be bound by all the duties and obligations of the Lease applicable to Tenant.
Franchisor shall be entitled to recover from Tenant all amounts it pays to Landlord to cure Tenant's defaults under the Lease, including interest and reasonable collection costs.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to the 2025 Alloy Franchise Disclosure Document, the lease addendum explicitly states conditions under which Alloy is and is not liable. Generally, the lease addendum is structured to limit Alloy's direct liability related to the franchisee's lease agreement. The landlord acknowledges that the franchisee is not an agent or employee of Alloy and cannot bind Alloy in any way unless the lease is assigned to and accepted by Alloy in writing. This protects Alloy from liabilities created by the franchisee.
However, Alloy does have specific rights and potential liabilities under certain conditions. Alloy retains the right to access the premises to ensure the franchisee complies with the Franchise Agreement. If the lease expires or terminates, Alloy has the right to enter the premises to remove Alloy signage and branding to protect its marks, without incurring liability unless due to willful misconduct or gross negligence.
Furthermore, if Alloy elects to assume the lease, it must cure any defaults specified by the landlord and fulfill the franchisee's obligations under the lease. Even if Alloy assumes the lease, the original franchisee remains liable for obligations prior to the assignment. Alloy can recover from the franchisee any amounts paid to the landlord to cure the franchisee's defaults. This indicates that while Alloy aims to limit its direct liability, it may incur obligations if it chooses to step in and assume the lease to maintain the Alloy presence and standards.
Prospective franchisees should carefully review the lease addendum and understand the circumstances under which Alloy might assume the lease and the associated obligations. It is also important to understand the conditions under which Alloy can access the premises and the potential liabilities that may arise from such access or from assuming the lease.