Under what condition can an Alloy developer continue to operate a Facility after the Development Agreement is terminated?
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.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, a developer can continue to operate an Alloy facility after the Development Agreement is terminated only if a Franchise Agreement has been executed for that specific facility and that Franchise Agreement remains valid and has not been terminated.
This means that the Development Agreement and the Franchise Agreement are separate and distinct. The Development Agreement grants the right to develop multiple Alloy facilities within a specific territory, while the Franchise Agreement governs the operation of a single Alloy facility. If the Development Agreement is terminated, it does not automatically terminate any existing Franchise Agreements.
However, if a Franchise Agreement has not been executed for a particular facility before the Development Agreement is terminated, the developer loses the right to develop or operate that facility. Alloy retains the right to develop and operate, or to franchise others to develop and operate, Alloy facilities in the Development Territory for which a Franchise Agreement has not been executed. Therefore, it is crucial for developers to ensure that Franchise Agreements are in place for each facility they intend to operate to maintain their rights after the Development Agreement expires or is terminated.