Under what conditions can an Alloy franchisee terminate the Franchise Agreement?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Minnesota law provides franchisees with certain termination and nonrenewal rights. As of the date of this Franchise Agreement, Minn. Stat. Sec. 80C.14, Subd. 3, 4 and 5 require, except in certain specified cases, that a franchisee be given 90 days' notice of termination (with 60 days to cure) and 180 days' notice for nonrenewal of the franchise agreement.
If you fail to achieve the minimum annual Gross Sales a third time, we may terminate your Franchise Agreement without giving you the opportunity to cure the default. You must pay any shortfall of royalty fees for each failure to achieve the minimum annual Gross Sales.
Unless sooner terminated in accordance with Section 7 of this Agreement and subject to the terms detailed in Section 2.C, the term of this Agreement and all rights granted to you will expire on the date that your last ALLOY Facility is scheduled to be opened under the Development Schedule.
If you do not exercise your option to enter into a renewal agreement prior to the expiration of this Agreement and continue to accept the benefits of this Agreement after the expiration of this Agreement, then at our option, this Agreement may be treated either as (i) expired as of the date of expiration with you then operating a franchise without the right to do so and in violation of our rights; or (ii) continued on a month-to-month basis ("Interim Period") until one party provides the other with written notice of such party's intent to terminate the Interim Period, in which case the Interim Period will terminate thirty (30) days after receipt of the notice to terminate the Interim Period.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 51–56)
What This Means (2025 FDD)
Based on the 2025 Alloy Franchise Disclosure Document, a franchisee in Minnesota has certain rights regarding termination. Minnesota law stipulates that, except in specific cases, Alloy franchisees must receive 90 days' notice of termination, including 60 days to cure the issue, and 180 days' notice for non-renewal of the franchise agreement.
Additionally, Alloy may terminate the Franchise Agreement if a franchisee fails to achieve the minimum annual Gross Sales three times. In this scenario, Alloy is not obligated to provide an opportunity for the franchisee to correct the deficiency before terminating the agreement. The franchisee is also responsible for covering any shortfall in royalty fees resulting from not meeting the minimum annual Gross Sales targets.
Furthermore, the term of the Franchise Agreement, along with all rights granted to the franchisee, will expire on the date the last Alloy Facility is scheduled to be opened under the Development Schedule, unless terminated sooner in accordance with Section 7 of the agreement. If a franchisee does not exercise their option to enter into a renewal agreement and continues to operate after the agreement's expiration, Alloy can choose to treat the agreement as expired or continue it on a month-to-month basis, which can be terminated with 30 days' notice.