Does a pledge or seizure of ownership interests in the franchisee require Alloy's approval?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
rt of the daily operation of the business to a person or entity who shares in the losses or profits of the business in a manner other than as an employee will be considered a transfer for purposes of this Agreement. Specifically, but without limiting the generality of the foregoing, the following events constitute a transfer and you must comply with the right of first refusal, consent, transfer fee, and other transfer conditions in this Paragraph 11:
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, a pledge or seizure of any ownership interests in the franchisee or any owner that affects the ownership of 20% or more requires Alloy's advance written approval. This condition is in place to ensure that any changes in ownership meet Alloy's standards and do not negatively impact the operation or financial stability of the franchise.
This requirement is part of a broader set of transfer conditions that Alloy imposes to maintain control over who operates its franchises. These conditions also include Alloy having the right of first refusal to acquire the franchise agreement, the assignee meeting Alloy's current requirements for franchisees, payment of all outstanding amounts owed to Alloy or its affiliates, submission of all required reports, and compliance with modernization requirements.
For a prospective Alloy franchisee, this means that any significant change in ownership, even if it's due to a pledge or seizure, needs to be pre-approved by Alloy. Failing to obtain this approval can result in the attempted transfer being voided and Alloy having the right to either terminate the agreement or collect a transfer fee equal to two times the standard transfer fee of $10,000. This highlights the importance of maintaining open communication with Alloy regarding any potential changes in ownership structure.