Will funds from Alloy Brand Development Fees be accounted for separately from the franchisor's other funds?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
Funds from the Brand Development Fees paid will be accounted for separately from our other funds. We have the right to reimburse ourselves out of the Fund for the total costs (including indirect costs such as salaries for our employees who devote time and effort to Fund related activities and overhead expenses) of developing, producing and distributing any advertising materials and collecting the Brand Development Fee. We may also use money from the Fund to subsidize the cost of presenting refresher training or a franchisee meeting.
Any sums paid to the Fund that are not spent in the year they are collected will be carried over to the following year. We will prepare, and furnish to you upon written request, an annual statement of funds collected and costs incurred. We are not required to have the Fund statement audited, but if we choose to have the Fund audited it will be at the Fund's expense.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 31–42)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the funds from the Brand Development Fees will be accounted for separately from Alloy's other funds. Alloy has the right to reimburse itself from the Brand Development Fund for the total costs of developing, producing, and distributing advertising materials, as well as for collecting the Brand Development Fee. These costs can include indirect costs such as employee salaries and overhead expenses related to fund activities. Alloy may also use money from the Fund to subsidize the cost of refresher training or franchisee meetings.
Any unspent funds from the Brand Development Fees collected in a given year will be carried over to the following year. Alloy will provide franchisees with an annual statement of funds collected and costs incurred upon written request. While Alloy is not required to have the Fund statement audited, they may choose to do so, with the audit expenses borne by the Fund itself.
This arrangement is fairly typical in franchising, where franchisors often manage advertising funds contributed by franchisees. The separation of funds provides a degree of transparency, and the annual statement allows franchisees to see how the money is being spent. However, franchisees should note that Alloy has broad discretion over how the Brand Development Fund is used and is not obligated to ensure that expenditures benefit any specific geographic area or franchisee in proportion to their contributions.