What is the purpose of the 'STATE OF' section in the Alloy franchise agreement acknowledgement?

According to Alloy's 2025 Franchise Disclosure Document, the "STATE OF" section in the acknowledgement addendum to the Alloy franchise agreement serves to ensure compliance with specific state franchise laws and regulations. The acknowledgement addendum is not applicable to candidates or businesses located in franchise registration states such as California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin. This indicates that these states have specific franchise laws that require separate addenda or riders to the franchise agreement to address state-specific requirements. For example, Minnesota and Virginia require specific addenda to comply with their statutes and regulations. These addenda may cover aspects such as defense of trademark infringement claims, termination and nonrenewal rights, financial assurances like surety bonds, and deferral of initial franchise fee payments until pre-opening obligations are met.

For prospective Alloy franchisees, this means that the franchise agreement and its addenda will be tailored to the specific state in which the franchise is located. If the franchise is in a state with franchise registration laws, the franchisee will receive an addendum that modifies the standard franchise agreement to comply with those laws. This could include provisions related to termination rights, financial assurances, dispute resolution, and other state-specific requirements. The purpose of these state-specific addenda is to protect the franchisee's rights and ensure that the franchise relationship complies with all applicable state laws.

It is important for prospective franchisees to carefully review any state-specific addenda to the franchise agreement to understand their rights and obligations under state law. Franchisees should also consult with an attorney experienced in franchise law to ensure that they fully understand the implications of the franchise agreement and any addenda. By understanding the state-specific requirements, franchisees can make informed decisions about whether to invest in an Alloy franchise and protect their interests throughout the franchise relationship.