What makes the franchisor's repurchase of an Alloy franchisee's business lawful?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
ADDENDUM TO THE AREA DEVELOPMENT AGREEMENT REQUIRED FOR THE STATE OF CALIFORNIA
This Addendum pertains to franchises sold in the State of California and is for the purpose of complying with California statutes and regulations. Notwithstanding anything which may be contained in the body of the Area Development Agreement to the contrary, the Agreement is amended as follows:
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- California Business and Professions Code Sections 20000 through 20043, the California Franchise Relations Act, provide rights to the franchisee concerning termination, transfer or non-renewal of a franchise. If the area development agreement contains a provision that is inconsistent with the law, the law will control.
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- In all other respects, the Area Development Agreement will be construed and enforced according to its terms.
FRANCHISOR: Alloy Personal Training, LLC DEVELOPER:
ILLINOIS ADDENDUM TO FRANCHISE DISCLOSURE DOCUMENT
The following applies to franchises and franchisees subject to Illinois statutes and regulations:
Item 5: Due to the financial condition of the Franchisor, the Illinois Attorney General's Office has required a financial assurance. Therefore, we have posted a surety bond which is on file with the Illinois Attorney General's Office. A copy of the surety bond is attached as an exhibit to the Illinois addenda pages.
Illinois law governs the Franchise Agreement.
In conformance with Section 4 of the Illinois Franchise Disclosure Act, 815 ILCS 705/1-44 (West 2016), any provision in a franchise agreement that designates jurisdiction or venue outside the State of Illinois is void. However, a franchise agreement may provide for arbitration to take place outside of Illinois.
Your rights upon termination and non-renewal are set forth in sections 19 and 20 of the Illinois Franchise Disclosure Act.
In conformance with Section 41 of the Illinois Franchise Disclosure Act, any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
The 2025 Alloy FDD includes addenda for several states that address franchise law and agreements. For instance, the California Addendum states that the California Franchise Relations Act (Sections 20000 through 20043 of the California Business and Professions Code) provides rights to the franchisee concerning termination, transfer, or non-renewal of a franchise. If the area development agreement contains a provision inconsistent with this law, the law will take precedence.
Similarly, the Illinois Addendum mentions that Illinois law governs the Franchise Agreement, and any provision designating jurisdiction or venue outside Illinois is void, although arbitration may occur outside the state. It also states that franchisees cannot waive compliance with the Illinois Franchise Disclosure Act or any other Illinois law.
The Washington Addendum indicates that the Washington Franchise Investment Protection Act (chapter 19.100 RCW) may supersede provisions in the franchise agreement, particularly concerning termination and renewal. These addenda collectively ensure that franchisees' rights are protected under state laws, which would govern the legality of any repurchase of a franchise by Alloy.