When is the Initial Franchise Fee earned by Alloy?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
- A.
Initial Franchise Fee.
You must pay us an Initial Franchise Fee in the amount of set forth on the Data Sheet.
The Initial Franchise Fee is a lump sum payment and is due when you sign this Agreement.
The Initial Franchise Fee is earned upon receipt and, except as noted below, is nonrefundable.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the initial franchise fee is a lump sum payment that is due when you sign the Franchise Agreement. Alloy earns the initial franchise fee upon receipt. Except for the condition noted below for South Dakota franchisees, the initial franchise fee is nonrefundable.
For prospective Alloy franchisees, this means that the initial franchise fee must be paid at the time of signing the agreement. This fee compensates Alloy for granting the franchise and providing initial support. It is common practice in the franchise industry for the initial franchise fee to be earned upon receipt, as it covers Alloy's initial expenses in setting up the franchisee.
However, there is an exception for franchisees in South Dakota. Due to Alloy's financial condition, the South Dakota Securities Regulation Office requires a financial assurance. Therefore, for South Dakota franchisees, all initial fees and payments are deferred until Alloy completes its pre-opening obligations under the franchise agreement. This condition provides additional protection for franchisees in South Dakota, ensuring that Alloy fulfills its obligations before receiving the initial franchise fee.