Under what circumstances is the Alloy transfer fee waived?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
| Name of Fee (1) | Amount | Date Due | Remarks |
|---|---|---|---|
| travel, lodging, meals, and wages | |||
| Insufficient Funds/Late Report Fee | $100 fee for late report/late payment, with fee increasing by $50 for each subsequent late report/late payment (up to a maximum of $250 for the fourth and any subsequent late report/late payment | On demand, if incurred | You must pay us this fee if there are not sufficient funds in your bank account to process payments owed to us and/or our affiliates or you are late in submitting reports. If you incur this fee three times in any 12 month period, we may terminate your Franchise Agreement without giving you the right to cure the default |
| Interest on Overdue Amounts | 12% per annum or the highest legal contract rate, whichever is less | Upon billing | Payable on all overdue amounts. Interest accrues from the original due date until payment is received in full |
| Audit | Cost of the audit (estimated to be between $1,000 and $5,000) | On demand | Payable only if the audit is conducted due to your failure to provide reports when required or if the audit shows you have understated any amount due to us (or Gross Sales) by 3% or more. You must also pay any understated amount plus interest |
| Transfer Fee | $10,000 | Application fee is payable with request for approval of transfer. Transfer fee is payable when transfer is approved | No fee is imposed for a one time transfer to a corporate entity formed by you for the convenience of ownership or an instance where you have a Business and are adding an operating partner who will have a 20% or less ownership interest and we determine there is no c |
Source: Item 6 — OTHER FEES (FDD pages 15–20)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the standard transfer fee is $10,000, payable when the transfer is approved. However, Alloy does waive this fee under specific circumstances. A franchisee does not have to pay the transfer fee for a one-time transfer to a corporate entity that they form for ownership convenience. Additionally, the transfer fee is waived when adding an operating partner with 20% or less ownership interest, provided Alloy determines there is no change of control in the franchisee entity.
These exceptions to the transfer fee are beneficial for Alloy franchisees as they allow for flexibility in business structure and partnership arrangements without incurring additional costs. Forming a corporate entity can offer liability protection and tax advantages, while adding a minority operating partner can bring in expertise or capital. The waiver of the transfer fee in these situations reduces the financial burden on franchisees and encourages them to make strategic decisions that can benefit their business.
It is important to note that the waiver for adding an operating partner is conditional. Alloy must determine that there is no change of control in the franchisee entity. This means that Alloy retains the right to assess whether the addition of the partner significantly alters the management or decision-making power within the franchise. If Alloy believes that the addition of the partner does constitute a change of control, the transfer fee will still apply. Franchisees should seek clarification from Alloy regarding the criteria used to determine change of control to ensure they qualify for the waiver.
Overall, Alloy's policy on transfer fees provides some flexibility for franchisees while also protecting the franchisor's interests. By waiving the fee in specific situations, Alloy encourages franchisees to make strategic business decisions without incurring unnecessary costs. However, franchisees should carefully review the conditions for the waiver and seek clarification from Alloy to ensure they meet the requirements.