After termination of the Alloy Development Agreement, can the developer operate any business for which a Franchise Agreement has not been executed?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Upon termination or expiration of this Agreement, all rights granted to you will automatically terminate, and:
- A. All remaining rights granted to you to develop Facilities under this Agreement will automatically be revoked and will be null and void. You will not be entitled to any refund of any fees. You will have no right to develop or operate any business for which a Franchise Agreement has not been executed by us. We will be entitled to develop and operate, or to franchise others to develop and operate, ALLOY Facilities in the Development Territory, except as may be otherwise provided under any Franchise Agreement that has been executed between us and you and that has not been terminated.
- B. You must immediately cease to operate your business under this Agreement and must not thereafter, directly or indirectly, represent to the public or hold yourself out as a present or former developer of ours except in connection with the business operations of any existing, Facilities that have been developed prior to the termination of this Agreement and that are still operating under a valid Franchise Agreement.
- C. Except as specifically permitted under any then-effective Franchise Agreement, you must take such action as may be necessary to cancel or assign to us or our designee, at our option, any assumed name or equivalent registration that contains the name or any of the words ALLOY or any other Trademark of ours, and you must furnish us with evidence satisfactory to us of compliance with this obligation within 30 days after termination or expiration of this Agreement.
- D. Except as specifically permitted under any then-effective Franchise Agreement, you must assign to us or our designee all your right, title, and interest in and to your telephone numbers and must notify the telephone company and all listing agencies of the termination or expiration of your right to use any telephone number in any regular, classified or other telephone directory listing associated with the Trademarks and to authorize transfer of same at our direction.
- E. You must within 30 days of the termination or expiration pay all sums owing to us and our affiliates.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, if the Development Agreement is terminated, the developer cannot operate any business for which a Franchise Agreement has not been executed. All remaining rights to develop facilities are automatically revoked and become null and void. The developer is not entitled to any refund of fees paid under the Development Agreement. Alloy retains the right to develop and operate, or franchise others to develop and operate, Alloy facilities in the Development Territory, except as provided under any Franchise Agreement already executed and not terminated. This means a developer's rights are strictly limited to locations with active Franchise Agreements.
Upon termination, the developer must immediately cease operating under the Development Agreement and cannot represent themselves as a current or former developer of Alloy, except concerning existing facilities operating under valid Franchise Agreements. The developer must also cancel or assign to Alloy any assumed name registrations containing the Alloy name or trademarks, and assign their rights to telephone numbers associated with the trademarks, ensuring a clean break in branding and contact information.
These stipulations protect Alloy's brand and prevent confusion in the marketplace. The developer is obligated to pay all outstanding sums to Alloy and its affiliates within 30 days of termination or expiration. This ensures all financial obligations are settled promptly. The restrictions placed on the developer after termination are typical in franchising to maintain brand consistency and prevent unfair competition.