What is the required minimum annual Gross Sales for an Alloy franchise during the first year of operation?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
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For any year you fail to achieve the minimum annual Gross Sales, you must pay any shortfall of royalty fees for each failure to achieve the minimum annual Gross Sales. The shortfall amount equals 7% of the difference between your actual Gross Sales for the year and the minimum annual Gross Sales for that year. The required minimum annual Gross Sales for the first year of operation from the first day you open the Facility for business is $240,000. The second year will be the 12 month period beginning with your first anniversary date from the opening of the facility (this 12 month period is referred to as Year 2). The minimum annual Gross Sales for Year 2 and for each following year through the end of the initial
Source: Item 6 — OTHER FEES (FDD pages 15–20)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, a franchisee must achieve a minimum annual Gross Sales amount to avoid a royalty fee shortfall. The required minimum annual Gross Sales for an Alloy franchise during the first year of operation, starting from the day the facility opens for business, is $240,000. For the second year, defined as the 12-month period following the first anniversary of the opening date, and for each subsequent year through the initial term of the Franchise Agreement, the minimum annual Gross Sales increases to $300,000.
If an Alloy franchisee fails to meet the minimum annual Gross Sales, they must pay a royalty fee shortfall. This shortfall is calculated as 7% of the difference between the actual Gross Sales for the year and the required minimum annual Gross Sales. For example, if a franchisee's Gross Sales in the first year are $200,000, the difference from the $240,000 minimum is $40,000. The franchisee would then owe 7% of $40,000, which is $2,800, as a royalty fee shortfall.
Gross Sales for Alloy include all revenue from products and services sold at the Alloy facility, whether paid in cash, credit, or other forms. This includes session fees, membership fees, personal training fees, and revenue from merchandise sales. Sales taxes collected and remitted to the appropriate taxing authority are deducted from Gross Sales. Franchisees must provide Alloy with a weekly report of their facility's Gross Sales each Monday for the previous week. Alloy may also access the franchisee's computer system to obtain this information, but the franchisee is still required to submit the report.
This minimum sales requirement is a critical factor for prospective Alloy franchisees to consider. It sets a benchmark for financial performance and impacts the franchisee's royalty obligations. Failing to meet this minimum can result in additional fees, affecting the profitability of the franchise. Therefore, it is essential for potential franchisees to carefully evaluate their market and business plan to ensure they can achieve the required sales volume.