What happens if an Alloy franchisee fails to pay amounts due?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
relocate the Facility), you must repair and reopen the Facility in accordance with our then-current standards for the destroyed or damaged area within 120 days of the date of occurrence of the destruction or damage.
You do not have the right to relocate in the event you lose the right to occupy the Facility premises because of the cancellation of your lease due to your breach. The termination or cancellation of your lease due to your breach is grounds for immediate termination under subparagraph 13.B.2.
E. Modernization or Replacement. From time to time as we require, you must modernize and/or replace the building interior, trade dress, equipment, fixtures and improvements as may be necessary for your Facility to conform to the standards for similarly situated new ALLOY facilities, although we will limit any such modernization or replacement during the first two years of the term of this Agreement to a maximum of $10,000. Furthermore, in addition to performing general continued maintenance and refreshing of the Facility premises whenever necessary as set forth in subparagraph 5.C, you must make any required expenditures for equipment or leasehold improvements necessary to offer new services.
Each and every transfer of any interest in this Agreement or your business governed by Paragraph 11 or any renewal agreement covered by Paragraph 4 is expressly conditioned upon your compliance with these modernization or replacement requirements at the time of transfer or renewal.
You acknowledge and agree that the requirements of this subparagraph 5.E are both reasonable and necessary to ensure continued public acceptance and patronage of ALLOY facilities and to avoid deterioration or obsolescence in connection with the operation of the Facility. If you fail to make any improvement as required by this subparagraph or perform the maintenance described in subparagraph 5.C, we may, in addition to our other rights in this Agreement, effect such improvement or maintenance and you must reimburse us for the costs we incur.
F. Signage. All signage at your Facility must comply with our then current specifications, which we may modify and change from time to time due to modifications to the System, including changes to the Trademarks. You must make such changes to the outdoor signage as we require and at your cost.
PRODUCTS AND OPERATIONS STANDARDS AND REQUIREMENTS
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- You must implement and abide by our requirements and recommendations directed to enhancing substantial System uniformity and protecting the goodwill of the Trademarks. The following provisions control with respect to products and operations:
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Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, if a franchisee's lease is canceled due to their breach, they lose the right to relocate the facility. This lease termination also constitutes grounds for immediate termination of the franchise agreement.
Additionally, if an Alloy franchisee fails to make required expenditures for marketing, Alloy has the right to collect the deficiency and contribute it to the Brand Development Fund. Alloy also requires franchisees to modernize and/or replace the building interior, trade dress, equipment, fixtures, and improvements as needed to conform to the standards of new Alloy facilities. While Alloy will limit such modernization or replacement to a maximum of $10,000 during the first two years of the agreement, failure to make required improvements or perform necessary maintenance allows Alloy to effect such improvements or maintenance and require the franchisee to reimburse Alloy for the costs incurred.
For franchisees in South Dakota, the South Dakota Securities Regulation Office requires a financial assurance due to Alloy's financial condition. As a result, all initial fees and payments owed by franchisees to Alloy under the franchise agreement are deferred until Alloy completes its pre-opening obligations. Similarly, development fees and initial payments by area developers are deferred until the first facility developed under the development agreement opens. Furthermore, in the case of an ACH Transaction being rejected for Non Sufficient Funds (NSF) Alloy may at its discretion attempt to process the charge again within 30 days, and the franchisee agrees to an additional $25 charge for each attempt returned NSF which will be initiated as a separate transaction from the authorized recurring payment.