Can an Alloy franchisee retain a security interest in the transferred property?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
The application must indicate whether you or an Owner proposes to retain a security interest in the property to be transferred.
No security interest may be retained or created, however, without our 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.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, a franchisee must indicate on their application whether they or an Owner intends to retain a security interest in the property to be transferred. However, retaining or creating a security interest is not permitted without Alloy's prior written consent and must be under conditions acceptable to Alloy.
This means that while it may be possible to retain a security interest, it is subject to Alloy's approval. Alloy has the right to refuse this request or impose specific conditions. This protects Alloy's interests by ensuring that any security interest does not negatively impact the brand or the operation of the franchise.
Furthermore, the FDD states that any agreement used in connection with a transfer is subject to Alloy's prior written approval, which will not be unreasonably withheld. This suggests that Alloy aims to be reasonable in its decisions regarding transfers and security interests, but ultimately retains control over these matters to safeguard the franchise system. A franchisee should discuss this with Alloy to understand the specific conditions under which a security interest might be approved.