What is the process for Alloy to exercise its right of first refusal as described in subparagraph 11.F?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
ion (but not the obligation) to be substituted as obligor to the secured party and to cure your default; and, in the event we exercise such option, any acceleration of indebtedness due to your default shall be void.
In the event of your insolvency or the filing of any petition by or against you under any provisions of any bankruptcy or insolvency law, if your legal representative, successor, receiver or trustee desires to succeed to your interest in this Agreement or the business conducted hereunder, such person first must notify us, tender the right of first refusal provided for in subparagraph 11.F, and if we do not exercise such right, must apply for and obtain our consent to the transfer, pay the transfer fee provided for in subparagraph 11.C, and satisfy the transfer conditions described in subparagraph 11.D. In addition, you or the assignee must pay the attorneys' fees and costs that we incur in any bankruptcy or insolvency proceeding pertaining to you.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
The 2025 Franchise Disclosure Document for Alloy states that in the event of insolvency or bankruptcy, if the franchisee's legal representative, successor, receiver, or trustee wants to take over the franchise agreement, they must first notify Alloy and tender the right of first refusal as described in subparagraph 11.F. If Alloy chooses not to exercise this right, the representative must then apply for and obtain Alloy's consent to the transfer, pay the transfer fee outlined in subparagraph 11.C, and meet the transfer conditions detailed in subparagraph 11.D. Additionally, the franchisee or assignee is responsible for covering Alloy's attorney fees and costs related to any bankruptcy or insolvency proceedings.
Furthermore, Alloy requires that application for consent to a transfer and tender of the right of first refusal provided for in subparagraph 11.F must be made by submitting Alloy's form of application for consent to transfer, which must be accompanied by the documents Alloy requests and other required information.
This process ensures that Alloy maintains control over who operates a franchise within its system, even in situations like bankruptcy or transfer of ownership. By having the right of first refusal, Alloy can choose to buy back the franchise rather than allowing it to be transferred to an unapproved party. This protects the brand's standards and reputation. The application process and associated fees also ensure that any potential new franchisee meets Alloy's criteria and is financially capable of running the business.