Under what conditions can an Alloy franchisee transfer their rights and interests under the Development Agreement?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
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- The following provisions govern any transfer:
- A. We have the right to transfer all or any part of our rights or obligations under this Agreement to any person or legal entity.
- B. This Agreement is entered into by us with specific reliance upon your personal experience, skills and managerial and financial qualifications. Consequently, this Agreement, and your rights and obligations under it, are and will remain personal to you. You may only Transfer your rights and interests under this Agreement if you obtain our prior written consent and you transfer your rights and interests under the relevant Franchise Agreements for Facilities in the Development Territory as dictated by the circumstances. In this event, the transferee will be required, as a condition of approval of the transfer, to assume transferor's development obligations, including the payment of any remaining initial franchise fees. Accordingly, the assignment terms and conditions of the Franchise Agreements will apply to any Transfer of your rights and interests under this Agreement. As used in this Agreement, the term "Transfer" means any sale (including installment sale), assignment, gift, pledge, mortgage or any other encumbrance, transfer by bankruptcy, transfer by judicial order, merger, consolidation, reorganization, combination, share exchange, transfer by operation of law or otherwise, or transfer as a result of a death, disability, divorce or insolvency, whether direct or indirect, voluntary or involuntary, of this Agreement or any interest in it, or any rights or obligations arising under it, or of any material portion of your assets, or of any interest in you.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the Development Agreement is personal to the franchisee, meaning the franchisee's specific experience, skills, and financial qualifications were heavily considered. Therefore, a franchisee can only transfer their rights and interests under the Development Agreement if they obtain Alloy's prior written consent.
As a condition of approval for the transfer, the transferee must assume the transferor's development obligations, including the payment of any remaining initial franchise fees. The assignment terms and conditions of the Franchise Agreements will apply to any transfer of the franchisee's rights and interests under the Development Agreement.
The term "Transfer" is broadly defined, including any sale, assignment, gift, pledge, mortgage, encumbrance, transfer by bankruptcy, transfer by judicial order, merger, consolidation, reorganization, combination, share exchange, transfer by operation of law or otherwise, or transfer as a result of death, disability, divorce or insolvency. This definition covers both direct and indirect, voluntary or involuntary transfers of the agreement, any interest in it, any rights or obligations arising under it, any material portion of the franchisee's assets, or any interest in the franchisee.