Within what geographic radius of the former Alloy facility is the franchisee prohibited from operating a competing business after termination?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
The rights granted under this Agreement are limited to the right to develop Facilities located in the Development Territory, and do not include (i) any right to sell products and services identified by the Trademarks at any location or through any other channels or methods of distribution, including the Internet (or any other existing or future form of electronic commerce), other than at Facilities within the Development Territory pursuant to the terms of the applicable Franchise Agreement, (ii) any right to sell products and services identified by the Trademarks to any person or entity for resale or further distribution, or (iii) any right to exclude, control or impose conditions on our development or operation of franchised, company or affiliate owned facilities at
any time or at any location outside of the Development Territory. You may not use the words ALLOY or any of the other Trademarks as part of the name of your corporation, partnership, limited liability company or other similar entity.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the franchisee's competitive restrictions after termination depend on whether they had a Development Territory agreement. If the franchisee had a Development Territory, Alloy will not grant another franchise within that territory while the Development Agreement is active. However, this restriction ends upon the agreement's termination. After termination, Alloy can operate or franchise others within the former Development Territory, unless the franchisee has an active Franchise Agreement for a specific location. The franchisee is restricted from operating a competing Alloy business within the Development Territory only if an active Franchise Agreement is still in place.
Outside the Development Territory, Alloy and its affiliates have the right to grant other franchises or operate company-owned facilities without compensating the franchisee. This includes selling products or services associated with the Alloy system through any distribution channels. The franchisee cannot use the word "Alloy" or any of Alloy's trademarks as part of their new business's name.
For a prospective Alloy franchisee, this means that upon termination of the Development Agreement, there is no geographic radius preventing Alloy from establishing a competing business. The only exception is if the franchisee still has a Franchise Agreement in effect for a specific Alloy location. It is important for potential franchisees to understand the terms of both the Development Agreement and the Franchise Agreement to fully grasp the post-termination restrictions and opportunities.