After termination or expiration of the Alloy Development Agreement, is the developer entitled to a refund of any fees?

According to Alloy's 2025 Franchise Disclosure Document, if the Development Agreement is terminated or expires, the developer will not be entitled to a refund of any fees. Specifically, all rights granted to the developer under the agreement automatically terminate, and the remaining rights to develop facilities are revoked and considered null and void. 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 that has been executed between Alloy and the developer and that has not been terminated.

This means that a prospective Alloy developer should understand that the Development Fee, which is paid as consideration for the rights granted in the Development Agreement, is nonrefundable. This fee is fully earned by Alloy upon receipt. Therefore, if the developer fails to meet the development schedule or Alloy terminates the agreement due to the developer's default, the developer will not receive any portion of the Development Fee back.

This policy is fairly standard in franchising, as development fees are typically considered compensation to the franchisor for granting the developer the exclusive right to develop a territory for a specified period. The risk for the developer is that circumstances may change, or they may be unable to secure suitable locations or financing to develop the agreed-upon number of Alloy facilities within the development schedule. Therefore, it is crucial for prospective Alloy developers to carefully assess their capabilities and the market conditions in their target territory before entering into a Development Agreement and paying the Development Fee.