What recourse does an Alloy franchisee have if the franchisor unreasonably withholds consent to a transfer?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
Any agreement used in connection with a transfer will be subject to our prior written approval, which approval will not be withheld unreasonably.
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.
- C.
Transfer Fee.
You must pay to us a transfer fee in the amount of $10,000.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, if a franchisee seeks to transfer their franchise, Alloy's approval is required, but this approval will not be unreasonably withheld.
The FDD states that any agreement used in connection with a transfer will be subject to Alloy's prior written approval, and this approval will not be withheld unreasonably. However, if a franchisee attempts to transfer the franchise without prior written consent or does not comply with the terms of the agreement, the attempted transfer will be void. In such a case, Alloy can elect to deem the franchisee in default and terminate the agreement or collect a transfer fee equal to two times the standard transfer fee. The standard transfer fee is $10,000, so this penalty would be $20,000.
This clause protects franchisees from arbitrary denials of transfer requests, but it's important to note that Alloy still has specific conditions that must be met for a transfer to be approved. These conditions include the assignee meeting Alloy's current requirements for franchisees, all outstanding amounts owed to Alloy or its affiliates being paid, and compliance with reporting and modernization requirements. Franchisees should ensure they meet all these conditions to facilitate a smooth transfer process.