What was the total amount Alloy spent on advertising in the year ended December 31, 2024?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
. Pursuant to the shared-services arrangement, the Company was allocated $384,246 of shared-services costs for the year ended December 31, 2022, which are included in "Selling, general and administrative expenses" in the accompanying statements of operations and members' deficit.
Beginning January 2023, the Company began to provide certain services previously provided by Alloy. For these services, the Company allocated $33,610 and $45,804 of such costs to Alloy for the years ended December 31, 2024 and 2023, respectively, which are recognized as "Members' distributions" in the accompanying statement of operations and members' deficit.
NOTE 9. BRAND DEVELOPMENT FUND
Brand fund
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.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, Alloy collects brand fund fees of 2% of franchisees' reported sales. These funds are designated for advertising and related expenses to benefit franchisees, with a portion allocated to cover Alloy's administrative costs for managing the funds. The allocation is determined at Alloy's discretion. As of December 31, 2024, the funds collected but not yet spent on behalf of franchisees totaled $403,344, and as of December 31, 2023, the amount was $185,052. The document states that there were no funds spent on the franchisees' behalf but not yet received by Alloy for the years ended December 31, 2024, 2023 and 2022.
This indicates that Alloy retains control over the brand fund and decides how it is spent on advertising and related expenses. While the FDD specifies the amount of unspent funds as of December 31, 2024, it does not explicitly state the total amount Alloy spent on advertising during that year.
For a prospective franchisee, this means that while 2% of their gross sales go towards the brand fund, the actual amount spent on advertising in a given year is not transparently reported in this document. It would be prudent for a potential franchisee to inquire about the specific advertising expenses incurred during 2024 and to request a detailed breakdown of how the brand fund was utilized to support franchisees' marketing efforts. Understanding these details can help a franchisee assess the value and effectiveness of the brand fund contributions.
Additionally, the Alloy FDD mentions the possibility of establishing a regional advertising cooperative where up to 1% of franchisees' gross revenues could be collected, but as of December 31, 2024, this cooperative was not yet established. If such a cooperative were to be established, contributions would be credited towards a franchisee's local marketing expenditures.