Can Gold Star assign the Franchise Agreement to a third party?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
he transferee will enter into a written assumption, in a form satisfactory to the COMPANY, assuming and agreeing to discharge all of
- FRANCHISEE's obligations under this Agreement prior to and after the date of assumption;
- 13.4.5 The transferee shall have paid the COMPANY its then-current transfer fee. The amount of the transfer fee shall be set by the COMPANY from time to time in the exercise of its absolute discretion. The transfer fee as of the date of this Agreement, but subject to change, is Three Thousand Five Hundred Dollars ($3,500.00).
- 13.4.6 The transferee shall have executed the COMPANY's then-current form of franchise agreement for a term equal to the remaining current term of this Agreement, save and except that there shall be no initial franchise fee payable, and the transferee shall execute such other agreements and documents as the COMPANY may reasonably require.
- 13.5 Exceptions to Transfer Restrictions. Notwithstanding the foregoing, FRANCHISEE (if FRANCHISEE is an individual) may Transfer all of its interest in the Restricted Assets to an entity formed solely for the convenience of ownership without the COMPANY's consent, upon FRANCHISEE's written notice to the COMPANY and compliance with the following requirements:
- 13.5.1 FRANCHISEE will be newly organized and its articles of incorporation or organization, bylaws, partnership agreement, or operating agreement will provide that its activities are confined exclusively to operating the Business;
- 13.5.2 Franchisee's name will not consist of or contain the words "Gold Star Chili", or any colorable variation thereof, or any other mark in which the COMPANY has or claims a proprietary interest; and
- 13.5.3 FRANCHISEE and its Principals will comply with all of the requirements set forth in Section 17 below.
- 13.6 No Transfer by Operation of Law. No person or entity shall succeed to any of the rights of FRANCHISEE under this Agreement by virtue of any voluntary or involuntary proceeding in bankruptcy, receivership, attachment, execution, assignment for the benefit of creditors or other legal process. Any such attempt to so transfer FRANCHISEE's interest in this Agreement shall be null and void.
- 13.7 Prohibition on Issuing Equity.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, the Franchise Agreement can be transferred under certain conditions. Specifically, if the franchisee wishes to transfer their interest, they must comply with Section 13 of the agreement. This includes obtaining Gold Star's approval for the transfer.
However, there are exceptions to these transfer restrictions. A franchisee (if an individual) can transfer their assets to an entity formed solely for ownership convenience without Gold Star's consent, provided they give written notice and meet specific requirements. These requirements include the new entity's activities being confined to operating the business, not using "Gold Star Chili" in its name, and compliance with Section 17.
Additionally, the document states that no transfer of the franchisee's rights will be allowed through bankruptcy, receivership, or other legal processes. Any attempt to transfer the agreement in this way will be considered void. Upon the death or incapacitation of a person with controlling interest, their interest must be transferred to a Gold Star-approved third party within six months, subject to the same conditions as other transfers.