What constitutes a 'change of control' in the franchisee entity that would negate the Alloy transfer fee exception?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
| Name of Fee (1) | Amount | Date Due | Remarks |
|---|---|---|---|
| travel, lodging, meals, and wages | |||
| Insufficient Funds/Late Report Fee | $100 fee for late report/late payment, with fee increasing by $50 for each subsequent late report/late payment (up to a maximum of $250 for the fourth and any subsequent late report/late payment | On demand, if incurred | You must pay us this fee if there are not sufficient funds in your bank account to process payments owed to us and/or our affiliates or you are late in submitting reports. If you incur this fee three times in any 12 month period, we may terminate your Franchise Agreement without giving you the right to cure the default |
| Interest on Overdue Amounts | 12% per annum or the highest legal contract rate, whichever is less | Upon billing | Payable on all overdue amounts. Interest accrues from the original due date until payment is received in full |
| Audit | Cost of the audit (estimated to be between $1,000 and $5,000) | On demand | Payable only if the audit is conducted due to your failure to provide reports when required or if the audit shows you have understated any amount due to us (or Gross Sales) by 3% or more. You must also pay any understated amount plus interest |
| Transfer Fee | $10,000 | Application fee is payable with request for approval of transfer. Transfer fee is payable when transfer is approved | No fee is imposed for a one time transfer to a corporate entity formed by you for the convenience of ownership or an instance where you have a Business and are adding an operating partner who will have a 20% or less ownership interest and we determine there is no c |
Source: Item 6 — OTHER FEES (FDD pages 15–20)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, a transfer fee of $10,000 is generally required when transferring ownership of a franchise. However, there are exceptions to this fee. Alloy does not impose a transfer fee for a one-time transfer to a corporate entity formed by the franchisee for ownership convenience. Additionally, no fee is charged when adding an operating partner with 20% or less ownership interest, provided Alloy determines that this addition does not constitute a change of control in the franchisee entity.
The FDD does not explicitly define what Alloy considers a 'change of control.' However, it implies that a change of control would occur when transferring to an entity that is not solely for convenience of ownership or when adding an operating partner with more than a 20% ownership interest.
For a prospective Alloy franchisee, this means that while some transfers are exempt from the $10,000 fee, any transfer that Alloy deems a 'change of control' will incur the fee. It is important to note that Alloy retains the discretion to determine whether a change of control has occurred. Therefore, it is crucial for potential franchisees to seek clarification from Alloy regarding specific scenarios and what constitutes a 'change of control' to avoid unexpected fees.