Under the Alloy Franchise Agreement, is the franchisee granted an exclusive territory?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 12: TERRITORY]
ITEM 12 TERRITORY
Franchise Agreement
The Franchise Agreement grants you the right to operate your Franchised Business only at the location we approve ("Authorized Location"). 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. However, we will grant you a protected area, which will be described in an exhibit to your Franchise Agreement ("Designated Area"). If your Designated Area is located in a suburban area, your Designated Area will include a population of at least 30,000 people, which for most suburban areas will cover a radius of approximately 2 miles from the Authorized Location (taking into account any geographic factors like rivers or other similar natural boundaries). We reserve the right to create a more limited Designated Area for Facilities located in densely populated areas but your Designated Area will have a population of at least 30,000 people. Your Designated Area may be described in terms of street boundaries or may be drawn on a map to be attached to your Franchise Agreement. We (and any affiliates) will not establish, nor allow another franchise owner to establish, another Franchised Business located within your Designated Area, although in certain instances there may be overlap of Designated Area boundaries of two franchisees. We do not anticipate permitting franchisees to establish
Facilities at captive market locations, such as a shopping mall, office building, or similar location. There are no circumstances under which we can modify the boundaries of your Designated Area during the term of your Franchise Agreement.
[Item 12: TERRITORY]
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.
[Item 12: TERRITORY]
(4) to develop or franchise Special Site locations, which by their nature are unique and separate in character from sites generally developed as ALLOY facilities ("Special Sites"), and include, but are not limited to the following locations regardless of their location and their proximity to your Facility: (i) military bases; (ii) public transportation facilities (including airports); (iii) business or industry locations (e.g. manufacturing site, office building), or sports facilities; (iv) student unions or other similar buildings on college or university campuses; (v) malls or enclosed shopping centers; and (vi) community and special events.
[Item 12: TERRITORY]
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.
Source: Item 12 — TERRITORY (FDD pages 42–46)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, franchisees do not receive an exclusive territory under the standard Franchise Agreement. Instead, Alloy grants a protected area, referred to as a "Designated Area," which is described in an exhibit to the Franchise Agreement. This Designated Area typically includes a population of at least 30,000 people, often covering a radius of approximately 2 miles from the Authorized Location in suburban areas, taking into account geographical boundaries. Alloy reserves the right to create a more limited Designated Area for Facilities in densely populated areas, but it will still have a population of at least 30,000 people. The boundaries of the Designated Area cannot be modified during the term of the Franchise Agreement.
While Alloy will not establish or allow another franchisee to establish another Franchised Business within the Designated Area, there may be instances where Designated Area boundaries overlap between two franchisees. Alloy also retains the right to operate or franchise Facilities outside the Designated Territory and engage in other business activities, as well as develop or franchise Special Site locations, regardless of their proximity to the franchisee's Facility. These Special Sites include military bases, public transportation facilities, business or industry locations, sports facilities, college campuses, malls, and community events.
For franchisees who enter into an Area Development Agreement, they will receive a Development Territory within which they have rights to develop multiple Alloy Facilities. However, even with an Area Development Agreement, the territory is not exclusive. Franchisees may face competition from other franchisees, company-owned outlets, other distribution channels, or competitive brands controlled by Alloy. To maintain rights under the Area Development Agreement, franchisees must meet the Minimum Performance Schedule, including opening the required number of Facilities by the agreed-upon dates. Failure to meet these requirements may result in a loss of territorial exclusivity or termination of the Area Development Agreement.