How is a Change-in-Control determined for a nonindividual Gold Star franchisee?
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" for a nonindividual franchisee (such as a corporation, LLC, or partnership) occurs when 50% or more of the voting power of the franchisee is vested in a person or persons different from those who held 50% of the voting power immediately before the transaction.
For example, if a corporation owns a Gold Star franchise, and a series of stock sales results in a new individual or group of individuals controlling more than 50% of the corporation's voting shares, this would constitute a Change-in-Control. Gold Star requires aggregation of all transfers of ownership interest in a nonindividual franchisee from the date the entity first became a franchisee to determine if a Change-in-Control has occurred.
This provision is important because Gold Star must give prior written consent for any transfer of interest that results in a Change-in-Control. This allows Gold Star to maintain control over who operates its franchises and ensures that new controlling parties meet their standards. A prospective franchisee should carefully consider these restrictions on transferability and control when structuring their business.