What are considered 'Restricted Assets' for a Gold Star franchise that cannot be transferred without consent?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
The COMPANY has granted this franchise in reliance on the individual or collective character, skill, aptitude and business and financial capacity of FRANCHISEE and its Principals.
Accordingly, neither FRANCHISEE nor any person with an interest in FRANCHISEE shall (directly or indirectly, contingently, voluntarily, involuntarily, by contract, by will, by merger or consolidation, by transfer or issuance of stock, membership or partnership interests, by operation of law or otherwise), without the prior written consent of the COMPANY, sell, assign, transfer, convey, issue, lease, pledge, mortgage, encumber or make any disposition of in any manner (collectively, "Transfer"), or permit the Transfer of, or publicly advertise or offer any Transfer of, all or any part of any of the following or any interest therein (collectively the "Restricted Assets"): this Agreement, the Business, the Store, the Retail Location (whether owned or leased), any Lease, any interest or share in FRANCHISEE which results in a Change-in-Control (defined below), or all or a material part of the assets, real or personal, tangible or intangible, pertaining to the Store or the Business.
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.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, franchisees face restrictions on transferring certain assets without prior written consent from Gold Star. These 'Restricted Assets' include the Franchise Agreement itself, the Business, the Store, the Retail Location (whether owned or leased), any Lease, any interest or share in the franchisee which results in a Change-in-Control, or all or a material part of the assets, real or personal, tangible or intangible, pertaining to the Store or the Business. A Change-in-Control is defined as when 50% or more of the voting power of the franchisee is vested in a person or persons different from those who held it previously.
This means a Gold Star franchisee cannot sell the business, transfer the lease, or sell a controlling stake in their franchise to someone else without first getting approval from Gold Star. This provision allows Gold Star to maintain control over who operates its franchises and protects the brand's integrity. Gold Star grants the franchise based on the individual or collective character, skill, aptitude, and business and financial capacity of the franchisee and its Principals.
Gold Star also has a right of first refusal. If a franchisee wishes to transfer any of the Restricted Assets, they must first obtain a bona fide, executed, written offer from a purchaser and submit it to Gold Star. Gold Star then has the option to purchase the assets themselves at the offered price and terms. This gives Gold Star the opportunity to buy back a franchise location if they choose.
These transfer restrictions are typical in franchising to ensure brand consistency and protect the franchisor's investment in its trademarks and system. Prospective Gold Star franchisees should carefully consider these restrictions and discuss any potential exit strategies with Gold Star before signing the franchise agreement.