What fees are associated with the transfer of an Alloy franchise in the event of insolvency?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
e us with the right to elect either to deem you in default and terminate this Agreement or to collect from you and the guarantors a transfer fee equal to two times the transfer fee provided for in subparagraph 11.C.
- C. Transfer Fee. You must pay to us a transfer fee in the amount of $10,000. The transfer fee is nonrefundable even if, for any reason, the proposed transfer does not occur.
- D. Conditions of Transfer. We condition our consent to any proposed transfer, whether to an individual, a corporation, a partnership or any other entity upon the following:
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- Assignee Requirements. The assignee must meet all of our then-current requirements for our ALLOY franchise program we are offering at the time of the proposed transfer and sign our then-current form of franchise agreement modified to reflect the term remaining under this Agreement.
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- Payment of Amounts Owed. All amounts owed by you to us, or any of our affiliates, your suppliers or any landlord for the Facility premises and Facility, or upon which we or any of our affiliates have any contingent liability must be paid in full.
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- Reports. You must have provided all required reports to us in accordance with subparagraphs 9.H and I.
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Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the termination of the franchise agreement due to insolvency or bankruptcy may not be enforceable under applicable federal law. However, if a transfer is attempted without Alloy's prior written consent or compliance with the agreement's terms, it will be considered void, and the franchisee's interest in the agreement will be voluntarily abandoned. In such cases, Alloy has the right to either deem the franchisee in default and terminate the agreement or collect a transfer fee equal to two times the standard transfer fee.
The standard transfer fee for an Alloy franchise is $10,000. Therefore, if a transfer is attempted without Alloy's consent, the franchisee may be required to pay a fee of $20,000 (two times the standard transfer fee). This fee is nonrefundable, regardless of whether the proposed transfer occurs.
In addition to the transfer fee, Alloy may require that all outstanding amounts owed to them or their affiliates be paid in full before consenting to the transfer. This includes any amounts owed to suppliers or landlords for the facility premises. The assignee must also meet all of Alloy's then-current requirements for new franchisees and sign the current form of the franchise agreement, modified to reflect the remaining term.
It is important to note that California law may provide additional rights to franchisees concerning termination and transfer. Specifically, if the franchise agreement contains any provisions inconsistent with California Business & Professions Code Sections 20000 through 20043, the law will take precedence. Therefore, prospective Alloy franchisees in California should be aware of these protections.