Can Alloy request financial reports from the franchisee to evaluate the proposed transfer?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
ur prior written consent and except upon conditions acceptable to us. Any agreement used in connection with a transfer will be subject to our prior written approval, which approval will not be withheld unreasonably. You immediately must notify us of any proposed transfer and must submit promptly to us the application for consent to transfer and any other required documents and information. 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. The transfer fee is nonrefundable even if, for any reason, the proposed transfer does not occur.
- D. Conditions of Transfer. We condition our consent to any proposed transfer, whether to an individual, a corporation, a partnership or any other entity upon the following:
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- Assignee Requirements. The assignee must meet all of our then-current requirements for our ALLOY franchise program we are offering at the time of the proposed transfer and sign our then-current form of franchise agreement modified to reflect the term remaining under this Agreement.
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- Payment of Amounts Owed. All amounts owed by you to us, or any of our affiliates, your suppliers or any landlord for the Facility premises
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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, Alloy requires franchisees to submit an application for consent to transfer, along with any other required documents and information, if they propose to transfer their franchise. Alloy has the right to void any attempted transfer made without their prior written consent or that doesn't comply with the agreement terms. In such cases, Alloy can either consider 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.
Alloy conditions its consent to a proposed transfer on several factors. The assignee must meet Alloy's current requirements for franchisees and sign the current franchise agreement. All amounts owed to Alloy, its affiliates, suppliers, or the landlord must be paid in full. The franchisee must have provided all required reports to Alloy according to subparagraphs 9.H and I, and must have complied with the modernization provisions in subparagraph 5.E.
While the FDD excerpt specifies that the franchisee must have provided all required reports to Alloy, it does not explicitly state that Alloy can request financial reports from the franchisee as part of the transfer evaluation. However, it is implied that Alloy may request information to ensure the assignee meets the financial capability criteria for a new facility.
Prospective franchisees should clarify with Alloy what specific financial documents and information are required during the transfer application process to ensure full compliance and avoid any potential delays or issues.