Can Alloy grant rights to other franchise owners to establish Facilities outside a franchisee's Designated Territory?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
During the term of the Franchise Agreement, we (and any affiliates that we periodically might have) have the right:
- (1) to establish and operate, and grant rights to other franchise owners to establish and operate, Facilities or similar businesses at any locations outside your Designated Territory and on any terms and conditions we deem appropriate;
- (2) merge with, acquire or become associated with ("Merger/Acquisition Activity") any businesses or facilities of any kind (including those in competition with ALLOY) under other systems and/or marks, which businesses and facilities may convert to or operate under the Marks and may offer or sell training services or related products that are the same as or similar to the services or products offered at or from the Franchised Business, and which may be located anywhere;
- (3) to engage in any other business activities not expressly prohibited by the Franchise Agreement, both within and outside your Designated Territory, and
Source: Item 12 — TERRITORY (FDD pages 42–46)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, Alloy retains the right to grant rights to other franchise owners to establish and operate Alloy Facilities outside of a franchisee's Designated Territory. This means that while franchisees are granted a Designated Territory, Alloy is not restricted from allowing other franchisees to set up shop outside of that area.
This has significant implications for prospective Alloy franchisees. It means that even though a franchisee has a Designated Territory, Alloy can authorize another franchisee to open a Facility nearby, potentially drawing customers away and impacting the original franchisee's revenue. This lack of exclusivity is a common practice in franchising, allowing franchisors to expand their brand presence more rapidly.
Alloy also retains the right to engage in other business activities, such as mergers or acquisitions, that could introduce competition. They can also develop or franchise Special Site locations like military bases or airports, regardless of their proximity to a franchisee's Facility. Franchisees should be aware that their Designated Territory does not guarantee complete protection from competition, either from other franchisees or from Alloy itself.
Prospective franchisees should carefully consider the potential for competition when evaluating an Alloy franchise. Understanding the scope of the Designated Territory and the potential for Alloy to authorize other Facilities nearby is crucial for assessing the potential profitability and risks associated with the franchise.