Is Alloy required to furnish an audited statement of the Brand Development Fund to franchisees?
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 Alloy's 2025 Franchise Disclosure Document, Alloy is not required to provide franchisees with an audited statement of the Brand Development Fund. 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 franchisees have the right to request a statement showing how the Brand Development Fund is being managed, including the amounts collected and the costs incurred. However, Alloy is not obligated to have this statement audited by an independent accounting firm. The decision to audit the fund is at Alloy's discretion, and if they choose to do so, the cost will be covered by the Brand Development Fund itself, which is contributed to by franchisees.
For a prospective franchisee, this implies a degree of transparency regarding the Brand Development Fund, as they can request an annual statement. However, the lack of a mandatory audit means that the accuracy and completeness of the statement are not independently verified. This is a common practice in franchising, where franchisors often retain control over the Brand Development Fund and its reporting, but it is something a franchisee should be aware of when evaluating the franchise opportunity.