What is the purpose of the addendum to the Area Development Agreement for Alloy franchises sold in Virginia?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
This Addendum pertains to franchises sold in the Commonwealth of Virginia and is for the purpose of complying with Virginia 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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- Section 3, Development Fee, is amended to include the following statement: The Virginia State Corporation Commission's Division of Securities and Retail Franchising requires us to defer payment of the initial franchise fee and other initial payments owed by franchisee to the franchisor until the franchisor has completed its pre-opening obligations under the area development agreement.
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- In all other respects, the Area Development Agreement will be construed and enforced according to its terms.
Each of the undersigned hereby acknowledges having read and understood this Addendum and consents to be bound by all of its terms.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the addendum to the Area Development Agreement for franchises sold in Virginia is to ensure compliance with Virginia statutes and regulations. Specifically, it addresses the timing of initial payments.
The addendum modifies Section 3 of the Area Development Agreement, which concerns the Development Fee. It stipulates that the Virginia State Corporation Commission's Division of Securities and Retail Franchising requires Alloy to defer payment of the initial franchise fee and other initial payments from the franchisee until Alloy has fulfilled its pre-opening obligations under the Area Development Agreement.
This means that prospective Alloy area developers in Virginia will not be required to pay the initial franchise fee or other initial payments until Alloy has completed its responsibilities related to opening the franchise. This provides a level of financial protection for the franchisee, ensuring that they only pay these fees once Alloy has met its initial obligations. In all other respects, the Area Development Agreement remains in full effect.