If a franchisee transfers their rights under the Alloy Development Agreement, will the assignment terms and conditions of the Franchise Agreements apply?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
This Agreement is entered into by us with specific reliance upon your personal experience, skills and managerial and financial qualifications. Consequently, this Agreement, and your rights and obligations under it, are and will remain personal to you. You may only Transfer your rights and interests under this Agreement if you obtain our prior written consent and you transfer your rights and interests under the relevant Franchise Agreements for Facilities in the Development Territory as dictated by the circumstances. In this event, the transferee will be required, as a condition of approval of the transfer, to assume transferor's development obligations, including the payment of any remaining initial franchise fees. Accordingly, the assignment terms and conditions of the Franchise Agreements will apply to any Transfer of your rights and interests under this Agreement. As used in this Agreement, the term "Transfer" means any sale (including installment sale), assignment, gift, pledge, mortgage or any other encumbrance, transfer by bankruptcy, transfer by judicial order, merger, consolidation, reorganization, combination, share exchange, transfer by operation of law or otherwise, or transfer as a result of a death, disability, divorce or insolvency, whether direct or indirect, voluntary or involuntary, of this Agreement or any interest in it, or any rights or obligations arising under it, or of any material portion of your assets, or of any interest in you.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the assignment terms and conditions of the Franchise Agreements will apply to the transfer of rights and interests under the Development Agreement. Alloy retains the right to transfer its rights or obligations under the Development Agreement to another party. However, because Alloy has entered into the agreement with specific reliance on the franchisee's personal experience, skills, and financial qualifications, the franchisee's rights and obligations are personal to them.
Therefore, a franchisee can only transfer their rights and interests under the Development Agreement if they obtain Alloy's prior written consent and transfer their rights and interests under the relevant Franchise Agreements for facilities in the Development Territory. As a condition of approval for the transfer, the transferee will be required to assume the transferor's development obligations, including the payment of any remaining initial franchise fees.
This means that if a franchisee wants to sell their Alloy franchise development rights to someone else, that person must not only be approved by Alloy, but also agree to take on all of the original franchisee's responsibilities, including any outstanding payments. This protects Alloy by ensuring that any new franchisee meets their standards and is fully committed to the development schedule. It is important for prospective franchisees to understand these transfer conditions before entering into a Development Agreement with Alloy.