What is the criteria for a felony conviction to trigger termination of the Gold Star franchise agreement?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 14.4 Immediate Termination upon Notice.
Upon written notice to FRANCHISEE from the COMPANY, this Agreement and all rights granted FRANCHISEE hereunder shall immediately terminate if any of the following events occur:
- 14.4.1 FRANCHISEE or any of its shareholders, members or partners, or any Manager, is convicted of any felony that is reasonably likely, in the sole opinion of the COMPANY, to affect adversely the Products, the System, the Marks, or the goodwill associated therewith;
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, Gold Star can terminate the franchise agreement with written notice if the franchisee, any of its shareholders, members, partners, or any manager is convicted of any felony.
However, the felony conviction must meet a specific criterion: Gold Star must reasonably believe, in its sole opinion, that the felony is likely to adversely affect the Products, the System, the Marks, or the goodwill associated with them. This gives Gold Star the discretion to determine whether a felony conviction is serious enough to warrant termination.
This clause is important for prospective franchisees to consider, as it means that not all felony convictions will automatically lead to termination. Gold Star retains the right to assess the potential impact of the conviction on the brand and its operations before making a final decision. Franchisees should seek legal counsel to fully understand their rights and obligations under this clause.