Under an Alloy Area Development Agreement, will I receive an exclusive territory?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
rve the right to do so in the future, without first obtaining your consent.
Area Development Agreement
If you enter into an Area Development Agreement, you will receive a Development Territory within which you will have certain rights to develop multiple Alloy Facilities. Although you will receive a Development Territory with certain protected rights to develop multiple Alloy Facilities, you will not receive an exclusive territory. You may face competition from other franchisees, from outlets we own, or from other channels of distribution or competitive brands that we control. The size of the Development Territory will depend on the number of Facilities you commit to develop, and may be described in terms of contiguous zip codes, street or county boundaries, or other similar methods, and may be depicted on a map. If you meet the Minimum Performance Schedule, comply with all other provisions described in the Area Development Agreement and otherwise comply with the provisions of each related Franchise Agreement, we will not establish or license others to establish a Facility within the Development Territory assigned to you. You maintain your rights to your Development Territory even if the population increases.
We will grant you a Development Territory as described above, which will be set forth in an exhibit to your Area Development Agreement. Except as expressly limited by the Area Development Agreement, we and our affiliates retain all rights with respect to Facilities, the Marks, and any products and services anywhere in the world including the right: (a) to produce, offer and sell and to grant others the right to produce, offer and sell the products offered at Facilities and any other goods displaying the Marks or other trade and service marks through alternative distribution channels, as described above, both within and outside your Development Territory, and under any terms and conditions we deem appropriate; (b) to operate and to grant others the right to operate Facilities located outside the Development Territory under any terms and conditions we deem appropriate and regardless of proximity to your Facilities; and (c) the right to acquire and operate a business operating one or more fitness businesses located or operating in your Development Territory, except that these businesses will not operate using the Proprietary Marks.
To maintain your rights under the Area Development Agreement you must have open and in operation the cumulative number of Facilities stated on the Minimum Performance Schedule by the dates agreed upon in the Minimum Performance Schedule. Failure to do so will be grounds for either a loss of territorial exclusivity or a termination of the Area Development Agreement. We will approve the site for each Facility that you develop under the Area Development Agreement as set forth in the Franchise Agreement for each Facility. Below is a sample Minimum Performance Schedule for an Area Development Agreement for three Facilities.
| Facility Number | Date by Which Franchise Agreement Must be Signed | Date by Which the Facility Must be Opened and Continuously Operating for Business in the Territory | Cumulative number of Facilities Required to be Open and Continuously Operating for Business in the Development Territory as of the Date in Preceding Column |
|---|---|---|---|
| 1 | Effective Date of the Agreement | Within 1 year of the Effective Date of the Agreement | 1 |
| 2 | Within 1 year after the Effective Date of the Agreement. |
Source: Item 12 — TERRITORY (FDD pages 42–46)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, if you enter into an Area Development Agreement, you will receive a Development Territory, but it will not be an exclusive territory. This means that while you have certain protected rights to develop multiple Alloy Facilities within your Development Territory, you may face competition from other franchisees, outlets owned by Alloy, other distribution channels, or competitive brands that Alloy controls. The size of your Development Territory will depend on the number of Facilities you commit to developing and may be defined by contiguous zip codes, street or county boundaries, or other similar methods, potentially depicted on a map. As long as you meet the Minimum Performance Schedule and comply with the Area Development Agreement and related Franchise Agreements, Alloy will not establish or license others to establish a Facility within your Development Territory. Your rights to the Development Territory remain even if the population increases.
However, once you have signed a lease for the last Facility to be developed within your Development Territory, your exclusive rights under the Area Development Agreement expire. At that point, Alloy and its affiliates have the right to operate and grant development rights and franchises to others within the Development Territory, subject only to the territorial rights under your franchise agreements for the Facilities already in operation. The Development Territory cannot be altered unless both you and Alloy mutually agree. You are not granted any other option, right of first refusal, or similar right to acquire additional Facilities in your Development Territory under the Area Development Agreement, except as described above.
Alloy retains rights to operate and grant others the right to operate Facilities located outside the Development Territory under any terms and conditions they deem appropriate, regardless of proximity to your Facilities. They also retain the right to acquire and operate a business operating one or more fitness businesses located or operating in your Development Territory, as long as these businesses do not operate using Alloy's Proprietary Marks. To maintain your rights under the Area Development Agreement, you must have the cumulative number of Facilities stated on the Minimum Performance Schedule open and operating by the dates agreed upon in the Minimum Performance Schedule. Failure to do so may result in a loss of territorial exclusivity or termination of the Area Development Agreement.