What agreement must stockholders, members, or partners of a Gold Star franchisee make regarding the transfer of ownership interests?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
If FRANCHISEE or any proposed transferee is a corporation, limited liability company or partnership, such entity shall not issue any additional stock, membership, partnership or other ownership interests or permit any transfer of any such interest, and each stockholder, member or partner thereof shall, in writing, agree not to issue, assign, transfer, pledge, sell or otherwise convey all or part of any capital stock, membership interest or partnership interest in FRANCHISEE or such transferee, without compliance with the rights of the COMPANY set forth under this Section 13.
For the purpose of clarity, any such issuance or transfer will be considered a "Transfer" pursuant to
- this Section 13.
All partnership agreements and operating agreements shall contain provisions setting forth the foregoing restrictions.
All stock certificates shall have endorsed on them the legend set forth in Section 17.4, below.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, if a franchisee is a corporation, limited liability company, or partnership, the entity cannot issue additional ownership interests or permit any transfer of existing interests without complying with Gold Star's transfer rights. Each stockholder, member, or partner must agree in writing not to issue, assign, transfer, pledge, sell, or otherwise convey any capital stock, membership interest, or partnership interest without adhering to the company's rights as outlined in Section 13 of the franchise agreement. Any issuance or transfer of ownership will be considered a "Transfer" under Section 13.
To ensure compliance, all partnership agreements and operating agreements must include provisions that set forth these restrictions on transfer. Additionally, all stock certificates must have a legend endorsed on them, as detailed in Section 17.4 of the franchise agreement. This legend serves as a clear notice that the transfer of shares or interests is subject to the terms and conditions of the franchise agreement with Gold Star.
These requirements are designed to give Gold Star control over who becomes a franchisee or holds an ownership stake in a franchise. This helps Gold Star maintain consistent brand standards and protect its interests. Prospective franchisees should carefully review Section 13 and Section 17.4 of the franchise agreement to fully understand the restrictions and obligations related to ownership transfers.