What constitutes a 20% or more change of ownership interest in an Alloy franchise?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
Specifically, but without limiting the generality of the foregoing, the following events constitute a transfer and you must comply with the right of first refusal, consent, transfer fee, and other transfer conditions in this Paragraph 11:
Any change in the percentage of the franchisee entity owned, directly or indirectly, by any Owner (including any addition or deletion of any person or entity who qualifies as an Owner) that results in a 20% or more change of ownership interest;
Any change in the general partner of a franchisee that is a general, limited or other partnership entity;
For purposes of this subparagraph 11.A, a pledge or seizure of any ownership interests in you or in any Owner that affects the ownership of 20% or more of you or any Owner, which we have not approved in advance in writing; or
Any grant of a security interest in, or otherwise encumbrance of, any of the assets or securities of you, including the Facility unless you satisfy our requirements.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, a 20% or more change of ownership interest is a significant event that triggers specific requirements related to the transfer of the franchise. Specifically, any change in the percentage of the franchisee entity owned, directly or indirectly, by any owner (including the addition or deletion of any person or entity who qualifies as an owner) that results in a 20% or more change of ownership interest is considered a transfer.
This means that if an Alloy franchisee experiences a change in ownership that meets or exceeds this threshold, they must comply with Alloy's transfer conditions. These conditions include offering Alloy the right of first refusal to acquire the franchise agreement, obtaining Alloy's prior written consent, paying a transfer fee, and fulfilling other requirements outlined in the franchise agreement.
Additionally, the FDD specifies that a pledge or seizure of any ownership interests in the franchisee or any owner that affects the ownership of 20% or more of the franchisee or any owner, which Alloy has not approved in advance in writing, also constitutes a transfer. This provision aims to protect Alloy's interests by ensuring that any significant changes in ownership or control are subject to their review and approval. Alloy's franchise agreement outlines these stipulations to ensure that the brand maintains consistent standards and that new owners meet their requirements.