Are guarantors personally bound by the noncompete provisions in subparagraph 10.D of the Alloy Franchise Agreement?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
Schedule D to the Franchise Agreement
PERSONAL GUARANTEE AND AGREEMENT TO BE BOUND PERSONALLY BY THE TERMS AND CONDITIONS OF THE FRANCHISE AGREEMENT
In consideration of the execution of the Franchise Agreement by us, and for other good and valuable consideration, the undersigned, for themselves, their heirs, successors, and assigns, do jointly, individually and severally hereby become surety and guarantor for the payment of all amounts and the performance of the covenants, terms and conditions in the Franchise Agreement, to be paid, kept and performed by the franchisee, including without limitation the arbitration and other dispute resolution provisions of the Agreement.
Further, the undersigned, individually and jointly, hereby agree to be personally bound by each and every condition and term contained in the Franchise Agreement, including but not limited to the noncompete provisions in subparagraph 10.D, and agree that this Personal Guarantee will be construed as though the undersigned and each of them executed a Franchise Agreement containing the identical terms and conditions of this Franchise Agreement.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, guarantors are personally bound by the noncompete provisions outlined in subparagraph 10.D of the Franchise Agreement. Schedule D to the Franchise Agreement, titled "PERSONAL GUARANTEE AND AGREEMENT TO BE BOUND PERSONALLY BY THE TERMS AND CONDITIONS OF THE FRANCHISE AGREEMENT," explicitly states that the undersigned guarantors agree to be personally bound by each term in the Franchise Agreement, including the noncompete provisions in subparagraph 10.D.
This means that if you are required to provide a personal guarantee for an Alloy franchise, you will also be subject to the same noncompete restrictions as the franchisee. These restrictions prevent you from engaging in any Competitive Business during the term of the Franchise Agreement or for a period of two years after its expiration or termination. A Competing Business is defined as any facility or business which includes offering personal training services in a one-on-one or group setting.
The noncompete extends to the premises of the former Alloy facility, within 15 miles of that facility, and within 15 miles of any other business or facility using the Alloy System. This has significant implications for guarantors, as it restricts their ability to participate in similar businesses within a defined geographic area, even if they are not directly involved in the operation of the franchise.
Prospective franchisees and their guarantors should carefully review and understand the full scope of the noncompete provisions in subparagraph 10.D of the Alloy Franchise Agreement and the Personal Guarantee to fully understand the restrictions and obligations they are undertaking. It is advisable to seek legal counsel to assess the implications of these provisions before signing the Franchise Agreement and the Personal Guarantee.