When does the surety bond for Alloy become effective?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
Liability for the payment of this sum, to which we hereby obligate and bind ourselves, our heirs, executors, administrators, successors and assigns, jointly and severally, becomes effective upon the following conditions:
- Approval by the Administrator of the Washington State Securities Division of the Principal's application to offer or sell franchises in this state; and
- Failure by the Principal to strictly comply with all applicable provisions of, and all orders, rules, and regulations issued pursuant to, the Washington State Franchise Investment Protection Act, chapter 19:100 RCW.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the surety bond in Washington becomes effective upon two conditions. First, the Administrator of the Washington State Securities Division must approve the Principal's application to offer or sell franchises in the state. Second, the Principal must strictly comply with all applicable provisions, orders, rules, and regulations issued pursuant to the Washington State Franchise Investment Protection Act, chapter 19:100 RCW.
This means that the surety bond, which protects franchisees in the event of Alloy's non-compliance with franchise laws, only becomes active once Alloy is approved to offer franchises in Washington and adheres to all relevant regulations. The bond remains in effect as long as Alloy's registration is active, unless it is withdrawn, terminated through non-renewal, or revoked by the Securities Division.
Furthermore, the surety can cancel the bond with a 30-day written notice to both Alloy and the Securities Division. However, this cancellation does not affect any liabilities arising before the cancellation date. Any individual with a claim under the bond's conditions can initiate a lawsuit against Alloy and/or the surety in a competent court.