Is Alloy required to have the Brand Development Fund statement audited?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
Any sums paid to the Fund that are not spent in the year they are collected will be carried over to the following year. We will prepare, and furnish to you upon written request, an annual statement of funds collected and costs incurred. We are not required to have the Fund statement audited, but if we choose to have the Fund audited it will be at the Fund's expense.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 31–42)
What This Means (2025 FDD)
According to the 2025 FDD, Alloy is not required to have its Brand Development Fund statement audited. However, Alloy will prepare and furnish an annual statement of funds collected and costs incurred to franchisees upon written request. If Alloy chooses to have the fund audited, it will be at the Fund's expense.
This means that as a prospective Alloy franchisee, you are entitled to receive an annual statement detailing the funds collected and costs incurred related to the Brand Development Fund, provided you submit a written request. However, there is no guarantee that this statement will be audited by an independent third party.
The decision to audit the Brand Development Fund is at Alloy's discretion, and if they choose to do so, the cost will be covered by the fund itself, which is initially contributed by franchisees in the form of a Brand Development Fee. This arrangement is fairly common in franchising, where franchisors often have the flexibility to decide whether or not to conduct an audit of the fund.
As a potential franchisee, it would be prudent to inquire with Alloy about their historical practices regarding Brand Development Fund audits and to understand the circumstances under which they might choose to conduct an audit. This information can help you assess the level of transparency and accountability associated with the fund's management.