Does Alloy reserve the right to designate a single source of supply for certain required items?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
bilities Act and all other federal, state and local laws.
We reserve the right to designate a primary or single source of supply for certain required items, and we or an affiliate may be that single source. We have required vendors for equipment, our online POS and related technology services and printed marketing and promotional materials. We also reserve the right to require you to use a designated accountant or bookkeeping service if you do not provide required financial reports and statements when they are due, or your financial reports and statements are not accurate. For other items, we have a list of preferred vendors for your consideration, although you may use another vendor provided the vendor's product or service meets our specifications or standards.
You must maintain in sufficient supply (as we may prescribe in the Manual or otherwise in writing), and use at all times, only the products purchased from suppliers designated or approved by us, and any other products, materials, supplies, fixtures, furnishings, equipment, computer systems, signs, and other items as conform with our standards and specifications, and not deviate from those standards and specifications by the use of non-conforming items without our prior written consent. A complete list of our approved products and suppliers will be included in the Manual and is subject to change over time. We will provide you notice in the Manual or otherwise in writing (such as via e-mail) of any changes to the lists of approved products and approved suppliers. You may not enter into any agreement with any health club aggregator, multi-partner membership program or utilize any type of discount, deal, or coupon-type website, without our prior written consent.
You must permit us or our agents, during normal business hours, to remove a reasonable number of samples of products from your inventory or from the Franchised Business free of charge for testing by us or by an independent laboratory to determine whether the samples meet our thencurrent standards and specifications. In addition to any other remedies we may have, we may require you to pay for the testing if we have not previously approved the supplier of the item or if the sample fails to conform to our specifications.
Except for those items where we have approved a sole supplier, if you wish to purchase, lease or use any products or other items, or you wish to purchase from an unapproved supplier, you must submit a written request for approval, or must request the supplier to do so. We must approve any product or supplier in writing before you make any purchases of that product or from that supplier. We can require that our representatives be permitted to inspect the supplier's facilities and that samples from the supplier be delivered either to us or to an independent laboratory for testing. We reserve the right to re-inspect the facilities and products of any approved supplier and to revoke our approval if the supplier fails to continue to meet any of our then-current
standards. Our supplier approval procedure does not obligate us to approve any particular supplier, and in certain circumstances we may designated a supplier as a sole supplier or one of two or three approved suppliers. We will notify you within six months after we complete the inspection and evaluation process of our approval or disapproval of any proposed supplier. We are not required to make available to you or to any supplier the criteria for product or supplier approval that we deem confidential. You must reimburse all costs we incur related to evaluating a product or supplier that you propose, up to a maximum of $5,000 per request. We may also revoke approval of a particular product or supplier. If we notify you in writing that our approval has been revoked, you must stop purchasing that product and/or stop purchasing from that supplier.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 25–29)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, Alloy retains the right to designate a single source of supply for certain required items. Alloy has already designated required vendors for equipment, the online POS system and related technology services, and printed marketing and promotional materials. If a franchisee fails to provide accurate and timely financial reports, Alloy also reserves the right to require the use of a designated accountant or bookkeeping service. For other items, Alloy maintains a list of preferred vendors, but franchisees may use alternative vendors if their products or services meet Alloy's specifications and standards.
Alloy also states that franchisees must maintain sufficient supplies of products purchased from approved suppliers. These products, along with other items like materials, supplies, fixtures, furnishings, equipment, computer systems, and signs, must conform to Alloy's standards and specifications. Franchisees cannot deviate from these standards by using non-conforming items without prior written consent from Alloy. A complete list of approved products and suppliers is included in the Manual and is subject to change, with franchisees receiving written notice of any changes.
Furthermore, Alloy may establish strategic alliances or preferred vendor programs with suppliers, potentially limiting the number of approved suppliers or designating specific sources that franchisees must use. Alloy also reserves the right to collect and retain any allowances, rebates, credits, incentives, or benefits (collectively, "Allowances") offered by manufacturers, suppliers, and distributors based on franchisee purchases. For the fiscal year ended December 31, 2024, Alloy collected $221,972 in Allowances, which was 5.48% of their overall revenue of $4,048,688. Alloy estimates that purchases from approved suppliers or that conform to their specifications will represent approximately 50%-60% of the initial investment to establish the Franchised Business, and approximately 20%-30% of total purchases in the continuing operation of the Franchised Business.
This means that as an Alloy franchisee, you will be required to purchase a significant portion of your supplies and equipment from Alloy-approved vendors. While this ensures brand consistency and quality control, it may also limit your ability to negotiate better prices or source products locally. The fact that Alloy can collect and retain allowances from suppliers based on your purchases is also noteworthy, as it could potentially impact your costs and profitability. Prospective franchisees should carefully review the list of approved suppliers and understand the implications of these purchasing restrictions before investing in an Alloy franchise.