What are the consequences if an Alloy franchisee fails to notify the franchisor of a proposed transfer?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
ur prior written consent and except upon conditions acceptable to us. Any agreement used in connection with a transfer will be subject to our prior written approval, which approval will not be withheld unreasonably. You immediately must notify us of any proposed transfer and must submit promptly to us the application for consent to transfer and any other required documents and information. Any attempted transfer by you without our prior written consent or otherwise not in compliance with the terms of this Agreement will be void, your interest in this Agreement will be voluntarily abandoned, and it will provide us with the right to elect either to deem you in default and terminate this
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, if a franchisee attempts to transfer their franchise without Alloy's prior written consent or without complying with the terms of the franchise agreement, several consequences may occur.
First, the attempted transfer will be considered void, meaning it has no legal effect. Second, the franchisee's interest in the franchise agreement will be considered voluntarily abandoned, essentially forfeiting their rights under the agreement.
Additionally, Alloy has the right to choose one of two options: they can either declare the franchisee in default and terminate the franchise agreement, or they can demand that the franchisee and any guarantors pay a transfer fee equal to two times the standard transfer fee. Since the standard transfer fee is $10,000, this means the franchisee could be liable for $20,000. This highlights the importance of adhering to the outlined transfer procedures to avoid these penalties.