Who must execute the general release when transferring a Gold Star franchise?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 13.4 Company's Non-Exercise. If the COMPANY elects not to exercise such first right of refusal, such sale or transfer shall not take place without the prior written consent of the COMPANY. The COMPANY shall not be required to give its consent unless, in addition to the requirements of Section 17, the following conditions are met prior to the consummation of the Transfer:
- 13.4.2 The transferor, and its shareholders, members and partners, have executed a general release, in form and substance satisfactory to the COMPANY (and if applicable, conforming to requirements of local Franchise Law, as such term is defined in Section 22.1, below), of any and all claims against the COMPANY, its affiliates, shareholders, directors, officers and employees;
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, when a franchisee transfers their franchise, the transferor, along with its shareholders, members, and partners, must execute a general release. This release must be in a form and substance satisfactory to Gold Star. If applicable, the release must also conform to the requirements of local Franchise Law.
This requirement means that if you decide to sell your Gold Star franchise, you, as the franchisee, and any individuals or entities holding ownership stakes in your franchise (such as shareholders if you operate as a corporation) must sign a release. This release essentially waives any claims you may have against Gold Star, its affiliates, shareholders, directors, officers, and employees.
The purpose of this release is to protect Gold Star from potential future legal issues arising from the former franchisee's operation or any past disputes. It is a fairly standard practice in franchising to ensure a clean break between the franchisor and the outgoing franchisee. Prospective franchisees should carefully review this requirement with legal counsel to understand the full scope of the release and its implications for their specific situation before transferring a Gold Star franchise.