To whom is the Leasehold Improvements fee paid for an Alloy franchise?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
NT
YOUR ESTIMATED INITIAL INVESTMENT
| Type of Expenditure | Amount | Method of Payment | When Due | To Whom Payment is to be Made |
|---|---|---|---|---|
| Initial Franchise Fee (1) | $60,000 | Lump sum | Upon signing Franchise Agreement | Us |
| Rent – 3 Month |
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 20–25)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the Leasehold Improvements fee, which ranges from $95,240 to $180,270, is paid to a contractor. This expenditure covers the costs associated with modifying the leased space to meet Alloy's brand standards and operational requirements. These costs can fluctuate based on the size and condition of the facility, as well as local construction costs.
Alloy estimates this range assuming the franchisee is renting a second-generation space, which typically requires less extensive modifications compared to a new or raw space. The FDD also anticipates that franchisees will negotiate a tenant improvement allowance or credit (TI) with the landlord to offset some of these costs. During 2024, franchisees received TI credits ranging from $0 to $188,000, highlighting the variability in these negotiations. The availability and amount of TI depend on factors such as the condition of the premises, the tenant's financial strength, and the lease term.
The estimate provided by Alloy includes expenses for materials like paint, trim, plumbing, electrical work, and flooring, as well as labor costs for installing these features. However, the actual costs may differ based on the facility's location, size, and condition. Franchisees should carefully consider these factors and obtain detailed quotes from contractors to accurately estimate their leasehold improvement expenses. It is also important to try and negotiate a favorable tenant improvement allowance with the landlord to help mitigate these costs.