What are the primary sources of revenue for the Alloy franchise company?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company derives its revenues from franchisees located throughout the United States. The economic risks of the Company's revenues are dependent on the strength of the economy in the United States, and the Company's ability to collect on its contracts. The Company disaggregates revenue from contracts with customers by timing of revenue recognition by type of revenue, as it believes this best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
Pursuant to the structured form of the franchising arrangement, the Company collects brand fund fees of 2% of franchisees' reported sales. These funds are spent solely on advertising and related expenses for the benefit of the franchisees with a portion designated to offset the Company's administrative costs to administer the funds, all at the discretion of the Company. Funds collected and not yet expended on the franchisees' behalf totaled $403,344 and $185,052 as of December 31, 2024 and 2023, respectively.
For these services, the Company allocated $33,610 and $45,804 of such costs to Alloy for the years ended December 31, 2024 and 2023, respectively, which are recognized as "Members' distributions" in the accompanying statement of operations and members' deficit.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the company generates revenue from franchisees located throughout the United States. Alloy disaggregates revenue from contracts with customers by the timing of revenue recognition and by type of revenue. Alloy believes this approach best illustrates how economic factors affect the nature, amount, timing, and uncertainty of revenue and cash flows.
Alloy's revenue streams are further supported by a structured franchising arrangement where the company collects brand fund fees, set at 2% of franchisees' reported sales. These brand fund fees are earmarked for advertising and related expenses that benefit the franchisees. A portion of these funds can be used to offset Alloy's administrative costs for managing the funds, at the company's discretion.
In 2024 and 2023, Alloy allocated $33,610 and $45,804 of costs to Alloy Personal Training Solutions LLC, respectively, for certain services previously provided by them. These amounts are recognized as "Members' distributions" in the statement of operations and members' deficit. Additionally, as of December 31, 2024, and 2023, the funds collected but not yet expended on the franchisees' behalf totaled $403,344 and $185,052, respectively.