Under what circumstances might Alloy designate a supplier as a sole supplier?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
ls to continue to meet any of our then-current
standards. Our supplier approval procedure does not obligate us to approve any particular supplier, and in certain circumstances we may designated a supplier as a sole supplier or one of two or three approved suppliers. We will notify you within six months after we complete the inspection and evaluation process of our approval or disapproval of any proposed supplier. We are not required to make available to you or to any supplier the criteria for product or supplier approval that we deem confidential. You must reimburse all costs we incur related to evaluating a product or supplier that you propose, up to a maximum of $5,000 per request. We may also revoke approval of a particular product or supplier. If we notify you in writing that our approval has been revoked, you must stop purchasing that product and/or stop purchasing from that supplier.
We reserve the right to develop proprietary products that are manufactured according to our specifications. Because of the importance of quality and uniformity of production and the significance of those products in the System, it is to your and our benefit that we closely control the production and distribution of those products. Therefore, you will use only our proprietary products and will purchase those items only from us, our affiliate or from the supplier we designate.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 25–29)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, Alloy has the discretion to designate a supplier as the sole supplier or one of a limited number of approved suppliers (two or three). This decision is made in certain circumstances, although the FDD does not explicitly define those circumstances.
If a franchisee wishes to use a product or supplier not already approved, they must submit a written request for approval. Alloy can require an inspection of the supplier's facilities and testing of product samples, with the franchisee bearing the costs up to $5,000 per request. Alloy is not obligated to disclose the criteria for product or supplier approval if they deem it confidential.
Alloy also reserves the right to develop proprietary products and require franchisees to purchase these exclusively from Alloy, its affiliates, or a designated supplier. This is to ensure quality and uniformity within the Alloy system. Furthermore, Alloy may limit the number of approved suppliers or designate mandatory sources if it believes doing so is in the best interest of the system.
Prospective franchisees should inquire with Alloy about the specific circumstances under which a sole supplier might be designated and what criteria are used for supplier approval, as these details are not fully transparent in the FDD.