What does the rent estimate for an Alloy franchise include?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
is discussed in detail in Item 5.
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- Rent. You will need approximately 1,500-2,000 square feet of space for a Facility which will generally be located in a strip shopping center or free-standing location. The average Alloy studio is 1600 sq feet. If your space is larger, the cost to finish will also be higher. Our estimates assumes that you will not purchase real property for your Facility location, you will lease the premises for your Facility at between $17 - $65 per square foot and as part of your lease negotiation you and the landlord will agree that you will not begin to pay rent until at least the month that your Facility opens. Landlords may vary the base rental rate and charge rent based on a percentage of gross sales. In addition to base rent, your lease may require you to pay common area maintenance charges ("CAM Charges") for your pro rata share of the real estate taxes and insurance, and your pro rata share of other charges. The $65 per square foot rate includes CAM Charges, taxes and insurance. The actual amount you pay under the lease will vary depending on the size of the Facility, the types of charges that are allocated to tenants under the lease, your ability to negotiate with landlords and the prevailing rental rates in the geographic region. Location is a major factor in the amount of rent required. We recommend different membership pricing tiers when calculating rent factors to account for high rent districts in certain parts of the country. We are unable to estimate with any precision the costs of leasing or purchasing real estate because of the wide variation from region to region and between markets. If you choose to purchase real property on which to build your Facility, your initial investment will probably be higher than what we estimate above. If you purchase real property, we cannot estimate how this purchase will affect your total initial investment.
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- Security Deposits. Our estimate assumes that you will need to provide one month of rent as a security deposit to your landlord, and you may need to provide security deposits for
your utilities (such as gas, water and/or electric). Some landlords might require additional security deposits.
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- Architect/Project Management. You must hire an architect to assist with design, layout and architectural drawings suitable for permitting per the Alloy Design Manual. Your plans must be approved by us before you can begin building out your Facility, but our review of your plans is only to verify compliance with our requirements and presentation of the Marks. You and your architect must make sure that your construction plans comply with all applicable laws, ordinances and building codes, including the Americans with Disabilities Act.
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 20–25)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the rent estimate for a facility, which typically requires 1,500-2,000 square feet of space, considers a rate between $17 and $65 per square foot. Alloy estimates that franchisees will lease the premises and negotiate with the landlord to defer rent payments until the facility opens. The $65 per square foot rate includes common area maintenance (CAM) charges, taxes, and insurance. However, the actual lease amount can fluctuate based on the facility size, allocated charges under the lease, negotiation skills, and regional rental rates. Location significantly impacts rent, and Alloy suggests different membership pricing tiers to accommodate high-rent districts. Alloy also estimates that franchisees will need to provide one month's rent as a security deposit to the landlord.
The document also specifies that the leasehold improvements estimate assumes the landlord provides adequate cooling, water, and heating infrastructure. It includes some materials like paint, trim, plumbing, electrical, and flooring, as well as labor costs and installation of certain features, including flooring and lighting. Franchisees are expected to negotiate a tenant improvement allowance or credit (TI) with the landlord, which can vary significantly by market. During 2024, franchisees received TI credits ranging from $0 to $188,000, depending on factors like the condition of the premises, the tenant's financial condition, and the lease term.
Prospective Alloy franchisees should note that these rent estimates are subject to change based on various factors and negotiation outcomes. The FDD explicitly states that Alloy cannot estimate leasing or purchasing real estate costs with precision due to regional and market variations. Therefore, franchisees must conduct thorough local market research and negotiate favorable lease terms to manage their initial investment effectively. Additionally, if a franchisee chooses to purchase real property, the initial investment will likely be higher than the provided estimates, and Alloy cannot predict the exact impact on the total investment.