What happens to franchise agreements entered into before the cancellation date of the Alloy surety bond?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
This Bond shall expire at such time as the Principal's registration is withdrawn, terminates through non-renewal, or is revoked by the Securities Division except as to liabilities of the Principal arising prior to such time. This Bond may also be cancelled by the Surety upon 30 days written notice by registered mail to the Principal and to the Securities Division. At the end of the 30 day period, the Bond shall be deemed cancelled except as to liabilities of the Principal arising prior to the date of cancellation. The notice of cancellation shall be deemed effective and the 30 day period shall begin to run upon
FRANCHISOR SURETY BOND Page 1 of 3 Revised April 22, 2010
receipt by the Securities Division of said notice and sufficient proof of receipt of said notice by the Principal.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, a surety bond may be cancelled with 30 days' written notice to both the Principal (Alloy) and the Securities Division. The notice is effective upon receipt by the Securities Division and proof of receipt by Alloy. After the 30-day period, the bond is considered cancelled. However, this cancellation does not release Alloy from liabilities that arose before the cancellation date. This means that any claims against Alloy that occurred before the bond was cancelled are still valid and can be pursued.
For a prospective Alloy franchisee, this information is crucial because it provides a level of financial security. If Alloy fails to comply with franchise regulations before the surety bond's cancellation, franchisees have the right to make a claim against the bond to recover losses. This protection remains in place even after the bond is cancelled, as long as the franchisee's claim originated before the cancellation date.
This arrangement is fairly standard in franchising, where surety bonds are often required to protect franchisees from potential financial harm due to a franchisor's actions. The surety bond offers a financial safety net, ensuring that franchisees have recourse if Alloy violates the terms of the franchise agreement or any applicable franchise laws. Franchisees should be aware of the terms and conditions of the surety bond, including the process for making a claim and the circumstances under which the bond can be cancelled.