What are the requirements for an Alloy franchisee to grant a security interest in their assets?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
of first refusal provided for in subparagraph 11.F must be made by submission of our form of application for consent to transfer, which must be accompanied by the documents we request and other required information. The application must indicate whether you or an Owner proposes to retain a security interest in the property to be transferred. No security interest may be retained or created, however, without our 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 and Facility, or upon which we or any of our affiliates have any contingent liability must be paid
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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 obtain prior written consent from Alloy before retaining or creating a security interest in transferred property. This consent is granted only under conditions acceptable to Alloy.
Any agreement used in connection with a transfer is subject to Alloy's prior written approval, which Alloy states will not be unreasonably withheld. 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.
Attempting to transfer without Alloy's prior written consent or failing to comply with the terms of the agreement renders the transfer void. In such cases, the franchisee's interest in the agreement is considered voluntarily abandoned. This gives Alloy the right to either 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 an unapproved transfer could result in a $20,000 fee.
Alloy also conditions its consent to any proposed transfer on several factors. The assignee must meet all of Alloy's then-current requirements for new franchisees and sign the current form of the franchise agreement. All amounts owed by the franchisee to Alloy, its affiliates, suppliers, or any landlord for the facility premises must be paid in full. The franchisee must have provided all required reports to Alloy and complied with modernization provisions. Finally, the franchisee must provide a guarantee.