Under what conditions will Alloy consent to a franchise transfer?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
raph 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:
-
- 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.
-
- 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 in full.
-
- Reports. You must have provided all required reports to us in accordance with subparagraphs 9.H and I.
-
- Modernization. You must have complied with the provisions of subparagraph 5.E.
-
- Guarantee. In the case of an installment sale for which we have consented to you or any Owner retaining a security interest or other financial interest in this Agreement or the business operated thereunder, you or such Owner, and the guarantors, are obligated to guarantee the performance under this Agreement until the final close of the installment sale or the termination of such interest, as the case may be.
-
- General Release. You, each Owner and each guarantor must sign a general release of all claims arising out of or relating to this Agreement, your Facility or the parties' business relationship, in the form we designate, releasing us and our affiliates.
-
-
- Training. The assignee must, at your or assignee's expense, comply with the training requirements of subparagraph 7.B.
-
- Financial Reports and Data. We have the right to require you to prepare and furnish to assignee and/or us such financial reports and other data relating to the Facility and its operations reasonably necessary or appropriate for assignee and/or us to evaluate the Facility and the proposed transfer. You agree that we have the right to confer with proposed assignees and furnish them with information concerning the Facility and proposed transfer without being held liable to you, except for intentional misstatements made to an assignee.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, Alloy has specific conditions for consenting to a franchise transfer. Alloy emphasizes that the original agreement was made based on the franchisee's specific financial qualifications, experience, skills, and managerial abilities. Therefore, any transfer requires Alloy's prior written consent. Before seeking consent, the franchisee must first offer Alloy the right of first refusal to acquire the franchise. If Alloy declines, the franchisee can proceed with the transfer request, provided they pay a transfer fee of $10,000.
Alloy's consent is conditional upon several factors related to the proposed assignee. The assignee must meet all of Alloy's then-current requirements for new franchisees, including signing the current franchise agreement (modified to reflect the remaining term). Additionally, the franchisee must have paid all outstanding amounts owed to Alloy, its affiliates, suppliers, or the landlord. The franchisee must also be current on all required reports to Alloy and have complied with any modernization requirements.
Furthermore, Alloy requires that any security interest in the transferred property be subject to their prior written consent and acceptable conditions. The company must be notified immediately of any proposed transfer, and the franchisee must promptly submit the application for consent and all other required documentation. Failure to obtain prior written consent from Alloy or comply with the agreement's terms will render the transfer void, potentially leading to default and termination of the agreement or the imposition of a transfer fee equal to two times the standard transfer fee.
These transfer conditions are typical in franchising, as franchisors want to ensure that any new franchisee meets their standards and will maintain the brand's reputation. The right of first refusal allows Alloy to maintain control over its franchise system. The financial requirements protect Alloy and its affiliates from potential losses. Franchisees looking to transfer their Alloy franchise should carefully review these conditions and ensure they are met to avoid complications or penalties.