Under what conditions can Alloy immediately terminate the franchise agreement without an opportunity to cure?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Immediate Termination With No Opportunity to Cure. In the event any of the following defaults occurs, you will have no right or opportunity to cure the default and this Agreement will terminate effective immediately on our issuance of written notice of termination:
- i. any material misrepresentation or omission in your franchise application;
- ii. your voluntary abandonment of this Agreement or the Facility which shall include, but not be limited to, your Facility being closed for a period of five consecutive days without our prior written consent;
- iii. the loss of your lease, the failure to timely cure a default under the lease, the loss of your right of possession or failure to reopen or relocate under subparagraph 5.D;
- iv. the closing of the Facility by any state or local authorities for health or public safety reasons;
- v. failure to locate a site for your Facility within 180 days after signing this Agreement or your failure to open the Facility within 365 days after signing this Agreement;
- vi. any unauthorized use of the Confidential Information;
- vii. failure to maintain required insurance as required in subparagraph 10.C;
- viii. insolvency of you, an Owner, or guarantor, you, an Owner, or guarantor making an assignment or entering into any similar arrangement for the benefit of creditors;
- ix. any default under this Agreement that materially impairs the goodwill associated with any of the Trademarks;
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, there are several conditions under which Alloy can immediately terminate the franchise agreement without giving the franchisee an opportunity to correct the issue. These conditions include any material misrepresentation or omission in the franchise application. This means that if the franchisee provides false or misleading information during the application process, Alloy can terminate the agreement immediately.
Another condition for immediate termination is the voluntary abandonment of the agreement or the Alloy facility. This includes the facility being closed for five consecutive days without Alloy's prior written consent. The loss of the lease, failure to cure a default under the lease, loss of the right of possession, or failure to reopen or relocate the facility as required also constitute grounds for immediate termination. If any state or local authorities close the Alloy facility for health or public safety reasons, Alloy can terminate the agreement immediately.
Further, Alloy can immediately terminate the agreement if the franchisee fails to locate a site for their facility within 180 days after signing the agreement or fails to open the facility within 365 days after signing the agreement. Any unauthorized use of Alloy's confidential information or failure to maintain the required insurance coverage also allows for immediate termination. Finally, Alloy can immediately terminate the agreement if the franchisee, an owner, or a guarantor becomes insolvent, makes an assignment, or enters into a similar arrangement for the benefit of creditors, or if there is any default under the agreement that materially impairs the goodwill associated with Alloy's trademarks.
These terms are fairly standard in the franchise industry, as franchisors need to protect their brand and system standards. Prospective Alloy franchisees should carefully review these conditions and ensure they understand their obligations to avoid potential termination without an opportunity to cure.