What does the surety bond posted by Alloy in Maryland cover regarding the initial franchise fee?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
Due to the financial condition of the Franchisor, the Maryland Securities Commissioner has required a financial assurance. Therefore, we have posted a surety bond which is on file with the Maryland Securities Division. A copy of the surety bond is attached as an exhibit to the Maryland addenda pages. The surety bond covers the initial franchise fee for a single unit franchise or an area development franchise for three units, which at this time is all we are offering and selling in the State of Maryland. We will not offer and sell any other area development franchises in the State of Maryland.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, due to the franchisor's financial condition, the Maryland Securities Commissioner has mandated a financial assurance in the form of a surety bond. This bond, which is on file with the Maryland Securities Division and attached as an exhibit to the Maryland addenda pages, specifically covers the initial franchise fee.
This coverage extends to both single-unit franchises and area development franchises for up to three units. Alloy states that it is only offering and selling these types of franchises in Maryland and will not offer any other area development franchises in the state.
For a prospective franchisee in Maryland, this surety bond provides a level of financial protection related to the initial franchise fee. Should Alloy fail to meet certain financial obligations, the franchisee may be able to make a claim against the bond to recover the initial franchise fee, subject to the terms and conditions of the surety bond itself.