What happens if Alloy does not exercise its right of first refusal for a proposed franchise 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 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
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Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
I am unable to provide information regarding what happens if Alloy does not exercise its right of first refusal for a proposed franchise transfer, as this specific scenario is not addressed within the provided excerpts from the 2025 Franchise Disclosure Document. The excerpts do discuss the conditions for transfer, the transfer fee, and Alloy's right to approve or deny a transfer.
Specifically, the FDD states that Alloy must be notified of any proposed transfer, and the franchisee must submit an application for consent. Alloy's consent is conditional upon the assignee meeting Alloy's current requirements for franchisees, payment of all outstanding amounts owed by the franchisee, submission of all required reports, compliance with modernization requirements, and providing a guarantee. Alloy also requires a $10,000 transfer fee, which is nonrefundable, even if the transfer does not occur.
To fully understand the implications of a proposed transfer, a prospective franchisee should ask Alloy about the specific procedures and criteria Alloy uses to evaluate potential transferees. It would also be prudent to clarify what recourse a franchisee has if Alloy unreasonably withholds consent for a transfer, and what happens if Alloy declines to exercise its right of first refusal.