What constitutes a 'Transfer' of Restricted Assets for a Gold Star franchise?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
pany**. This Agreement shall inure to the benefit of the COMPANY and its successors and assigns. The COMPANY may sell, transfer or assign this Agreement and any rights or duties hereunder to any third party at any time, and upon the giving of written notice to FRANCHISEE of any such transfer, COMPANY will have no further responsibility for the performance of any of the transferred obligations. FRANCHISEE shall execute any forms that the COMPANY may reasonably require in connection with any transfer or assignment by the COMPANY.
- 13.2 No Assignment by Franchisee. 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. 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.
- 13.3 Company's Right of First Refusal. Notwithstanding anything contained in this Agreement to the contrary, if FRANCHISEE or any Principal wishes to Transfer or accept an offer to Transfer, in any manner whatsoever, all or any part of any of the Restricted Assets, or any interest therein, FRANCHISEE or its Principals, as the case may be, will first obtain a bona fide, executed, written offer from a fullydisclosed purchaser and will submit an exact copy thereof to the COMPANY.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, a 'Transfer' of Restricted Assets is broadly defined and requires the company's prior written consent. Gold Star has granted the franchise based on the franchisee's individual or collective character, skills, aptitude, and business and financial capacity. Therefore, any direct or indirect change in ownership or control must be approved by Gold Star.
Specifically, a 'Transfer' includes selling, assigning, conveying, issuing, leasing, pledging, mortgaging, encumbering, or making any disposition of Restricted Assets. These assets encompass the franchise agreement itself, the business, the store, the retail location (whether owned or leased), any lease agreements, any interest or share in the franchisee that results in a Change-in-Control, or all or a material part of the assets pertaining to the store or the business. A 'Change-in-Control' occurs when 50% or more of the voting power of the franchisee is vested in a different person or persons than before.
Furthermore, if the franchisee is a corporation, limited liability company, or partnership, the issuance of any additional stock, membership, partnership, or other ownership interests, or any transfer of such interests, is also considered a 'Transfer'. This includes agreements from each stockholder, member, or partner not to issue, assign, transfer, pledge, sell, or convey any capital stock, membership interest, or partnership interest without complying with Gold Star’s rights as outlined in Section 13 of the franchise agreement. All partnership and operating agreements must contain provisions setting forth these restrictions, and all stock certificates must include a specific legend indicating these transfer restrictions.
This comprehensive definition of 'Transfer' ensures that Gold Star maintains control over who operates its franchises and protects the brand's reputation and standards. Prospective franchisees should be aware of these restrictions and the need for franchisor approval before making any changes to the ownership or control of the franchise.