Under the Alloy Franchise Agreement, what actions are considered a 'transfer' that require Alloy's consent?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
Any sale (including installment sale), lease, pledge, management agreement, contract for deed, option agreement, assignment, bequest, gift or otherwise, or any arrangement pursuant to which you turn over all or part of the daily operation of the business to a person or entity who shares in the losses or profits of the business in a manner other than as an employee will be considered a transfer for purposes of this Agreement.
Specifically, but without limiting the generality of the foregoing, the following events constitute a transfer and you must comply with the right of first refusal, consent, transfer fee, and other transfer conditions in this Paragraph 11:
Any change in the percentage of the franchisee entity owned, directly or indirectly, by any Owner (including any addition or deletion of any person or entity who qualifies as an Owner) that results in a 20% or more change of ownership interest;
Any change in the general partner of a franchisee that is a general, limited or other partnership entity;
For purposes of this subparagraph 11.A, a pledge or seizure of any ownership interests in you or in any Owner that affects the ownership of 20% or more of you or any Owner, which we have not approved in advance in writing; or
Any grant of a security interest in, or otherwise encumbrance of, any of the assets or securities of you, including the Facility unless you satisfy our requirements.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, several actions are considered a 'transfer' that require the franchisor's consent. These include any sale, such as an installment sale; lease; pledge; management agreement; contract for deed; option agreement; assignment; bequest; or gift. Additionally, any arrangement where the franchisee turns over all or part of the daily business operations to another party who shares in the business's losses or profits (other than as an employee) also constitutes a transfer.
Specifically, Alloy considers the following events as transfers requiring compliance with right of first refusal, consent, transfer fee, and other transfer conditions: any change in the ownership percentage of the franchisee entity by an Owner that results in a 20% or more change of ownership interest, any change in the general partner of a franchisee that is a partnership, a pledge or seizure of ownership interests affecting 20% or more of the franchisee or any Owner that Alloy has not approved in advance, and any grant of a security interest in or encumbrance of the franchisee's assets or securities, including the Facility, unless Alloy's requirements are met.
These stipulations are in place because Alloy relies on the franchisee's financial qualifications, experience, skills, and managerial qualifications when entering into the Franchise Agreement. Any attempted transfer without Alloy's prior written consent, or not in compliance with the agreement's terms, is considered void and may result in default or a transfer fee equal to two times the standard transfer fee. The standard transfer fee is $10,000. This fee is nonrefundable, regardless of whether the transfer occurs.