Can Alloy operate or grant franchises to others to develop and operate Alloy businesses after my exclusive rights expire?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition, when you have signed a lease for the last Facility to be developed within the Development Territory, your exclusive rights under the Area Development Agreement with respect to the Development Territory will have expired and we and our affiliates will have the right to operate and to grant to others development rights and franchises to develop and operate Facilities within the Development Territory. This right will be subject only to the territorial rights under your franchise agreements for Facilities in the Development Territory. The Development Territory may not be altered unless we and you mutually agree to do so. It will not be affected by your sales volume. You are not granted any other option, right of first refusal or similar right to acquire additional Facilities in your Development Territory under the Area Development Agreement, except as described above.
Source: Item 12 — TERRITORY (FDD pages 42–46)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, if you sign an Area Development Agreement, your exclusive rights to the development territory expire once you've signed a lease for the last facility to be developed within that territory. After this expiration, Alloy and its affiliates have the right to operate and grant development rights and franchises to others for Alloy facilities within your former development territory. This right is only subject to the territorial rights granted under your franchise agreements for facilities already in operation within the development territory.
This means that while you initially have certain protected rights to develop multiple Alloy facilities within a defined development territory, this protection is not permanent. Once you've met your development obligations by signing leases for all planned facilities, Alloy can then expand its presence in the area through company-owned outlets or by franchising to others. This is a crucial point for prospective area developers to consider, as it affects the long-term potential for expansion and market control.
It's important to note that Alloy also retains the right to operate and grant others the right to operate Alloy facilities outside of your designated territory under any terms and conditions they deem appropriate, regardless of proximity to your facilities. Furthermore, Alloy can engage in other business activities not expressly prohibited by the Franchise Agreement, both within and outside your designated territory. These provisions highlight that while franchisees receive some territorial protection, Alloy maintains significant flexibility in its overall business strategy and expansion plans.