What happens if an Alloy franchisee continues to operate after the agreement expires without renewing?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
If you do not exercise your option to enter into a renewal agreement prior to the expiration of this Agreement and continue to accept the benefits of this Agreement after the expiration of this Agreement, then at our option, this Agreement may be treated either as (i) expired as of the date of expiration with you then operating a franchise without the right to do so and in violation of our rights; or (ii) continued on a month-to-month basis ("Interim Period") until one party provides the other with written notice of such party's intent to terminate the Interim Period, in which case the Interim Period will terminate thirty (30) days after receipt of the notice to terminate the Interim Period.
In the latter case, all of your obligations shall remain in full force and effect during the Interim Period as if this Agreement had not expired, and all obligations and restrictions imposed on you upon expiration of this Agreement will be deemed to take effect upon termination of the Interim Period.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, if a franchisee continues to operate and accept the benefits of the franchise agreement after it expires without renewing, Alloy has the option to treat the situation in one of two ways. First, Alloy can consider the agreement expired as of the original expiration date, meaning the franchisee is operating without the right to do so and is violating Alloy's rights. Alternatively, Alloy can treat the agreement as continuing on a month-to-month basis, which is referred to as an "Interim Period."
If Alloy chooses to continue the agreement on a month-to-month basis, all of the franchisee's obligations remain in full effect as if the original agreement had not expired. All obligations and restrictions that would normally be imposed upon the expiration of the agreement will instead take effect upon the termination of this Interim Period. To end the Interim Period, either Alloy or the franchisee must provide written notice to the other party, with termination occurring thirty days after the notice is received.
This clause protects Alloy by ensuring that franchisees do not continue to benefit from the Alloy system and brand without a valid agreement. It also provides Alloy with flexibility in managing franchisees who may be in the process of negotiating a renewal or exit from the system. For a prospective franchisee, this highlights the importance of planning for renewal well in advance of the expiration date to avoid any disruption or potential legal issues.