What is Alloy's right if a Franchise Claim is made against them or their affiliates?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchise Claims include, but are not limited to, those arising from any death, personal injury or property damage (whether caused wholly or in part through our or our affiliates' active or passive negligence), latent or other defects in any Facility, or your employment practices.
If a Franchise Claim is made against us or our affiliates, we reserve the right in our sole judgment to select our own legal counsel to represent our interests, at your cost.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, a Franchise Claim includes claims arising from death, personal injury, property damage, defects in a Facility, or employment practices.
If a Franchise Claim is made against Alloy or its affiliates, Alloy reserves the right to select its own legal counsel to represent its interests. The franchisee will bear the cost of this legal representation.
This means that if a customer or employee sues Alloy or its affiliates due to something related to the franchisee's Alloy location, Alloy can choose its own lawyers to handle the case. However, the franchisee will ultimately be responsible for paying Alloy's legal fees in addition to their own legal costs if they choose to hire separate counsel. This could create a significant financial burden for the franchisee, especially if the claim is substantial or the litigation is prolonged.
This type of clause is not uncommon in franchise agreements, as franchisors want to protect their brand and reputation. However, prospective franchisees should carefully consider the potential financial implications of this clause and factor it into their decision-making process.