What rights does Alloy have regarding the Brand Development Fund?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
Pursuant to the structured form of the franchising arrangement, the Company collects brand fund fees of 2% of franchisees' reported sales. These funds are spent solely on advertising and related expenses for the benefit of the franchisees with a portion designated to offset the Company's administrative costs to administer the funds, all at the discretion of the Company. Funds collected and not yet expended on the franchisees' behalf totaled $403,344 and $185,052 as of December 31, 2024 and 2023, respectively. There were no funds expended on the franchisees' behalf but not yet received by the Company for the years ended December 31, 2024, 2023 and 2022.
If you fail to make the required expenditure, we have the right to collect and contribute the deficiency to the Brand Development Fund.
You must use only such marketing materials (including any print, radio, television, electronic, or other media forms that may become available in the future) as we furnish, approve or make available, and the materials must be used only in a manner that we prescribe.
You must submit all advertising and promotional materials to us prior to your use.
If we do not respond within 14 days after you submit the proposed advertising materials to us, the advertising materials will be deemed not approved.
We will not unreasonably withhold approval of any sales promotion materials or media and activities; provided that they are current, in good condition, in good taste and accurately depict the Trademarks.
We have the right to designate local or regional advertising markets and if designated, you must participate in and contribute to any group or cooperative advertising and marketing programs in your designated local or regional market.
If established, you must contribute to the amount we designate (or the cooperative designates if a cooperative is established).
Each ALLOY facility, including those operated by us or our affiliates within a designated local or regional advertising market (except Special Sites) is a member of the local advertising group or cooperative.
We will establish any rules or requirements of any local or regional advertising market (whether in the form of a group or cooperative.
Any amounts you
contribute to a local or regional advertising group or cooperative will count toward your local marketing requirement.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, Alloy has several rights regarding the Brand Development Fund. Alloy collects brand fund fees of 2% of franchisees' reported sales. These funds are to be spent solely on advertising and related expenses for the benefit of the franchisees, with a portion designated to offset Alloy's administrative costs to administer the funds, all at the discretion of Alloy. As of December 31, 2024, funds collected and not yet expended on the franchisees' behalf totaled $403,344, and $185,052 as of December 31, 2023.
Alloy also has the right to collect any deficiency in required local marketing expenditure from the franchisee and contribute it to the Brand Development Fund. Alloy also maintains control over the marketing materials used by franchisees, requiring that only materials furnished, approved, or made available by Alloy are used, and only in the manner prescribed by Alloy. Franchisees must submit all advertising and promotional materials to Alloy for approval before use. If Alloy does not respond within 14 days of submission, the materials are deemed not approved. Alloy states that it will not unreasonably withhold approval of sales promotion materials or media and activities, provided they are current, in good condition, in good taste, and accurately depict the Trademarks.
Alloy also has the right to designate local or regional advertising markets, and if designated, franchisees must participate in and contribute to any group or cooperative advertising and marketing programs in their designated market. The contribution amount will be designated by Alloy or the cooperative if one is established. Each Alloy facility, including those operated by Alloy or its affiliates (except Special Sites), is a member of the local advertising group or cooperative. Alloy will establish any rules or requirements of any local or regional advertising market, whether in the form of a group or cooperative. Any amounts franchisees contribute to a local or regional advertising group or cooperative will count toward their local marketing requirement.