How is a 'Change-in-Control' defined in the Gold Star franchise agreement?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
A "Change-in-Control" transaction or series of transactions shall occur when 50% or more of the voting power of FRANCHISEE is vested in a person or persons (as applicable) different from the person or persons (as applicable) with whom 50% of voting power was vested immediately prior to the transaction or series of transactions.
For purposes of this subparagraph, all transfers of an ownership interest in a nonindividual franchisee occurring since the date the entity first became a franchisee will be aggregated to determine whether a Change-in-Control has occurred.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, a 'Change-in-Control' is specifically defined within the context of transferring ownership interests in the franchise. This definition is important because Gold Star must approve any transfer of the franchise.
A 'Change-in-Control' occurs when 50% or more of the voting power of the franchisee shifts to a new person or group of people, compared to who held that voting power immediately before the transaction. This means that if a franchisee sells or transfers enough of their ownership stake that they no longer control the majority of the voting rights, it's considered a change in control.
For non-individual franchisees, Gold Star will look at all ownership transfers that have happened since the entity first became a franchisee. These transfers are added up to determine if a Change-in-Control has occurred. This cumulative assessment means even smaller, incremental transfers can eventually trigger the Change-in-Control clause, requiring franchisor approval. This provision aims to ensure that Gold Star retains control over who operates its franchises and maintains the brand's standards.