What are the specific requirements that Alloy may impose on a secured party in the event a franchisee grants a security interest in their assets?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, a franchisee cannot retain or create a security interest without Alloy's prior written consent and must do so only upon conditions acceptable to Alloy.
If a franchisee or an owner proposes to retain a security interest in transferred property, they must indicate this in their application to Alloy. Alloy maintains the right to set the conditions under which they will allow a security interest to be retained or created.
This means that if a franchisee wants to borrow money and use their Alloy franchise assets as collateral, they need to get permission from Alloy first. Alloy can then dictate the terms of that security agreement, giving them significant control over the franchisee's financing arrangements. This is a fairly common practice in franchising, as it protects the franchisor's brand and system standards.