What right does Alloy have regarding amounts held on behalf of or owed to an Alloy franchisee?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
. Pursuant to the shared-services arrangement, the Company was allocated $384,246 of shared-services costs for the year ended December 31, 2022, which are included in "Selling, general and administrative expenses" in the accompanying statements of operations and members' deficit.
Beginning January 2023, the Company began to provide certain services previously provided by Alloy. For these services, the Company allocated $33,610 and $45,804 of such costs to Alloy for the years ended December 31, 2024 and 2023, respectively, which are recognized as "Members' distributions" in the accompanying statement of operations and members' deficit.
**NOTE 9. BRAND
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to the 2025 Alloy FDD, Alloy collects brand fund fees of 2% of franchisees' reported sales. These funds are to be used solely for advertising and related expenses to benefit the franchisees, with a portion designated to offset Alloy's administrative costs to administer the funds. Alloy has discretion over how these funds are spent.
As of December 31, 2024, the total funds collected but not yet expended on behalf of the franchisees amounted to $403,344, while the corresponding figure for December 31, 2023, was $185,052. The FDD specifies that there were no funds expended on the franchisees' behalf but not yet received by Alloy for the years ended December 31, 2024, 2023 and 2022.
This arrangement means that Alloy franchisees contribute a percentage of their sales to a brand development fund, which Alloy manages. While the intention is to benefit franchisees through advertising and related activities, Alloy retains discretion over the fund's allocation, including offsetting its own administrative costs. Prospective franchisees should consider how this arrangement aligns with their expectations for marketing support and fund management.