What is the definition of 'good cause' for termination of the Gold Star franchise agreement?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 14.2 Termination Generally.
The COMPANY retains the right to terminate this Agreement for good cause prior to the expiration of its term.
As used in this Section, "good cause" shall include, without limitation, the event(s) described in Sections 14.3, 14.4 and 14.5, below.
- 14.3 Termination without Notice.
This Agreement (except as otherwise provided in Section 26, below) and all rights granted to FRANCHISEE hereunder shall terminate without notice to FRANCHISEE if:
14.3.1 FRANCHISEE or any of its partners, members or shareholders becomes insolvent or liquidated or dissolves;
14.3.2 A receiver, trustee or similar creditor's representative is appointed for all or any part of the business, property or assets of FRANCHISEE, or any of its partners, members or shareholders;
14.3.3 FRANCHISEE or any of its partners, members or shareholders files a voluntary petition in bankruptcy, or any other proceeding under any federal or state insolvency or similar law; or consents to the filing of an involuntary petition or proceeding of such type, or makes an assignment for the benefit of creditors; or
14.3.4 An involuntary petition in bankruptcy or any other proceeding under any federal or state solvency or similar law is filed by any other person against FRANCHISEE or any of its shareholders, members or partners without its, his or her acquiescing therein and is not dismissed within sixty (60) days of filing.
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;
14.4.2 Any provisions of Sections 11 or 12, regarding trade secrets, confidentiality and/or non-competition, are breached;
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, Gold Star retains the right to terminate the franchise agreement for good cause prior to the expiration of its term. The term 'good cause' includes, without limitation, the events described in Sections 14.3, 14.4 and 14.5 of the franchise agreement.
Section 14.3 outlines conditions for termination without notice. These include if the franchisee, or any of its partners, members, or shareholders, becomes insolvent, liquidated, or dissolves. It also includes scenarios where a receiver, trustee, or similar creditor's representative is appointed for the business, property, or assets of the franchisee, or if the franchisee files for bankruptcy or makes an assignment for the benefit of creditors. Additionally, an involuntary bankruptcy petition filed against the franchisee that is not dismissed within 60 days can lead to termination without notice.
Section 14.4 describes conditions for immediate termination upon written notice. These include if the franchisee, any of its shareholders, members, partners, or any manager is convicted of any felony that could adversely affect the Products, the System, the Marks, or the associated goodwill. A breach of Sections 11 or 12, regarding trade secrets, confidentiality, and/or non-competition, also results in immediate termination upon notice. Therefore, a 'good cause' termination can occur due to financial instability, criminal activity, or breaches of confidentiality or non-competition agreements.