What happens if an Alloy franchisee transfers their franchise without obtaining consent?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, if a franchisee attempts to transfer their franchise without Alloy's prior written consent or fails to comply with the terms of the Franchise Agreement, the attempted transfer will be considered void. This means the transfer will not be legally recognized.
Furthermore, the franchisee's interest in the Franchise Agreement will be considered voluntarily abandoned. This implies the franchisee forfeits their rights and obligations under the agreement. Alloy then has the option to either deem the franchisee in default and terminate the Franchise Agreement, effectively ending the franchise relationship, or collect a transfer fee from the franchisee and any guarantors. This transfer fee is equal to two times the standard transfer fee, which is normally $10,000, meaning the franchisee would have to pay $20,000.
This provision highlights the importance of obtaining Alloy's consent before any transfer of the franchise. It protects Alloy's interests by ensuring that any new franchisee meets their standards and that the transfer process is properly managed. The financial penalties and potential termination serve as a strong deterrent against unauthorized transfers.