What is the process for an Alloy franchisee to request consent to transfer?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
which we seek to enforce this Agreement. The parties agree that each of the foregoing covenants will be construed as independent of any other covenant or provision of this Agreement.
TRANSFER OF FRANCHISE
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- You agree that the following provisions govern any transfer or proposed transfer:
- A. Transfers. We have entered into this Agreement with specific reliance upon your financial qualifications, experience, skills and managerial qualifications as being essential to the satisfactory operation of the Facility. Consequently, neither your interest in this Agreement nor in the Facility may be transferred or assigned to or assumed by any other person or entity (the "assignee"), in whole or in part, unless you have first tendered to us the right of first refusal to acquire this Agreement in accordance with subparagraph 11.F, and, if we do not exercise such right, unless our prior written consent is obtained, the transfer fee provided for in subparagraph 11.C is paid, and the transfer conditions described in subparagraph 11.D are satisfied. Any sale (including installment sale), lease, pledge, management agreement, contract for deed, option agreement, assignment, bequest, gift or otherwise, or any arrangement pursuant to which you turn over all or part 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:
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- Any change in the percentage of the franchisee entity owned, directly or indirectly, by any Owner (including any addition or deletion of any person or entity who qualifies as an Owner) that results in a 20% or more change of ownership interest;
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- Any change in the general partner of a franchisee that is a general, limited or other partnership entity;
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- For purposes of this subparagraph 11.A, a pledge or seizure of any ownership interests in you or in any Owner that affects the ownership of 20% or more of you or any Owner, which we have not approved in advance in writing; or
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- Any grant of a security interest in, or otherwise encumbrance of, any of the assets or securities of you, including the Facility unless you satisfy our requirements.
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Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, a franchisee must first offer Alloy the right of first refusal to acquire the franchise agreement. If Alloy does not exercise this right, the franchisee must then seek Alloy's prior written consent to transfer the franchise. The franchisee must also pay a transfer fee and satisfy certain transfer conditions.
To initiate the transfer process, the franchisee must immediately notify Alloy of any proposed transfer and promptly submit an application for consent to transfer, along with any other required documents and information. The application must specify whether the franchisee or an owner intends to retain a security interest in the property to be transferred; however, no security interest can be retained or created without Alloy's prior written consent and agreement to the conditions.
Alloy conditions its consent to a proposed transfer on several factors. The assignee must meet all of Alloy's then-current requirements for new franchisees and must sign Alloy's current form of franchise agreement, modified to reflect the remaining term of the original agreement. Additionally, all amounts owed by the franchisee to Alloy, its affiliates, suppliers, or the landlord must be paid in full. The franchisee must also be current on all required reports to Alloy and must have complied with any modernization requirements.
Any transfer attempt without Alloy's prior written consent or that fails to comply with the terms of the franchise agreement will be considered void. In such cases, the franchisee's interest in the agreement will be considered voluntarily abandoned, giving Alloy the right to either terminate the agreement for default or collect a transfer fee equal to two times the standard transfer fee. The standard transfer fee is $10,000 and is nonrefundable, even if the transfer does not occur.