How does Item 11 describe Alloy's pre-opening obligations, and how do these obligations relate to the franchisee's initial investment costs in Item 7?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
Except as listed below, Alloy Personal Training, LLC is not required to provide you with any assistance.
Pre-Opening Obligations
Area Development Agreement: Under the Area Development Agreement, we will grant to you rights to a Development Territory within which you will establish and operate an agreedupon number of Facilities under separate Franchise Agreements. (Area Development Agreement – Section 2.A.)
Franchise Agreement: Before you open your Franchised Business, we will:
- Consult with you on the location for your Franchised Business, which must be accepted by us. Your site must meet our criteria for population and/or median income in the surrounding area, size and cost of the facility that you select and other similar factors, including
our business judgment. We may reject your proposed location in our sole discretion. Our acceptance only means that the site meets our minimum requirements for a Franchised Business (Franchise Agreement – Section 5.A).
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- Consult with you regarding the build-out for the interior of your Franchised Business or interior leasehold improvements and floor plan design. We will provide you with our specifications and requirements based on typical configurations for the layout of a Facility, including lists and specifications of approved fixtures, equipment and signs needed to outfit and furnish your Franchised Business in accordance with our uniform image and standards (Franchise Agreement – Section 5.B).
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- Lend you one copy of the Manual (Franchise Agreement Section 6.H). We will provide the Manual electronically.
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- Train up to three people, the cost of which is included in your initial franchise fee (Franchise Agreement – Section 7.B). This training is described in detail later in this Item.
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- Provide one of our representatives to conduct virtual grand opening assistance and training via Zoom or other virtual call. You may request on-site assistance, but you must pay our per diem fee for our representative and the additional out-of-pocket expenses our representative incurs for travel, hotel and meals. If you are opening your second or later Franchised Business, we reserve the right to provide opening assistance virtually and not on site at your Franchised Business (Franchise Agreement – Section 7.B and 8.B).
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, Item 11 outlines the franchisor's pre-opening obligations to the franchisee. Before the franchisee opens their Alloy franchised business, Alloy will consult on the location, ensuring it meets their criteria for population, median income, facility size, and cost. Alloy also consults on the build-out, providing specifications and requirements for interior leasehold improvements, floor plan design, fixtures, equipment, and signs. Alloy will lend one copy of the Operations Manual electronically and provide initial training for up to three people, the cost of which is included in the initial franchise fee. Finally, Alloy will provide virtual grand opening assistance and training. On-site assistance is available at the franchisee's expense, covering per diem fees, travel, hotel, and meals for Alloy's representative. These pre-opening obligations directly relate to the franchisee's initial investment, as the franchisee must secure a suitable location and complete the build-out according to Alloy's specifications, impacting costs detailed in Item 7.
Item 7, which covers the estimated initial investment, is directly impacted by Alloy's pre-opening obligations. The estimated initial investment is intended to cover pre-opening expenses, including pre-opening payroll and ongoing expenses for the startup phase of the business, estimated to be three months. These figures are based on the founder's experience since November 1992 and franchisees' experiences over the past four years. Item 7 notes that these are estimates and additional working capital may be necessary. The franchisee is also required to follow the pre-sale marketing playbook and conduct a pre-sale marketing campaign 60-90 days before the grand opening, which also impacts the initial investment.
Specifically, the initial franchise fee is $60,000, with a $5,000 discount for eligible veterans. Additionally, franchisees must spend between $30,000 and $40,000 on a grand opening marketing campaign, which must start 8-12 weeks prior to opening. Franchisees must also secure at least 75 members with signed monthly membership agreements and credit cards on file before opening. These pre-opening requirements and associated costs directly contribute to the total initial investment a franchisee must make. The franchisor's assistance in site selection and build-out, as described in Item 11, is intended to guide the franchisee through these processes, but the franchisee remains responsible for covering the associated expenses.
Prospective franchisees should carefully review both Item 7 and Item 11 to understand the full scope of their financial obligations and the support they will receive from Alloy during the pre-opening phase. Understanding these obligations and costs is crucial for assessing the financial feasibility of the franchise and planning accordingly. Franchisees should also inquire about any potential cost overruns or additional expenses that may arise during the pre-opening period to ensure they have sufficient capital to launch their Alloy franchise successfully.