What happens to the Alloy franchisee's exclusive rights under the Area Development Agreement when they have signed a lease for the last facility to be developed within the Development Territory?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition, when you have signed a lease for the last Facility to be developed within the Development Territory, your exclusive rights under the Area Development Agreement with respect to the Development Territory will have expired and we and our affiliates will have the right to operate and to grant to others development rights and franchises to develop and operate Facilities within the Development Territory. This right will be subject only to the territorial rights under your franchise agreements for Facilities in the Development Territory. The Development Territory may not be altered unless we and you mutually agree to do so. It will not be affected by your sales volume. You are not granted any other option, right of first refusal or similar right to acquire additional Facilities in your Development Territory under the Area Development Agreement, except as described above.
Source: Item 12 — TERRITORY (FDD pages 42–46)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, once a franchisee has signed a lease for the final facility to be developed within their designated Development Territory, their exclusive rights to that territory under the Area Development Agreement expire. This means that Alloy and its affiliates then have the right to operate or grant others the rights to develop and operate Alloy facilities within that same Development Territory.
However, the expiration of exclusive development rights is subject to the territorial rights granted under the franchisee's existing franchise agreements for facilities already operating within the Development Territory. In practical terms, while Alloy can develop new locations or allow others to do so, they must respect the protected areas around the franchisee's already established Alloy facilities.
The Development Territory itself cannot be altered unless both Alloy and the franchisee mutually agree to the change. The franchisee's sales volume does not affect the boundaries of the Development Territory. The franchisee is not granted any other option, right of first refusal, or similar right to acquire additional facilities in their Development Territory under the Area Development Agreement, beyond the initial agreement.