Does the Gold Star franchise agreement define 'Related Parties' in the context of confidentiality?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 11.2 Application of Covenants to Related Parties. Upon the COMPANY's request, FRANCHISEE will require the following persons to execute covenants similar to those set forth in this Section 11 (including covenants applicable upon the termination of a person's relationship with FRANCHISEE): (1) all managers, officers and directors of FRANCHISEE; (2) all holders of a beneficial interest of 5% or more of the securities (including membership interests) of FRANCHISEE, and of any corporation or limited liability company directly or indirectly controlling FRANCHISEE, if FRANCHISEE is a corporation or limited liability company; and (3) all general partners of FRANCHISEE (including any corporation, and the officers, directors, and holders of a beneficial interest of 5% or more of the securities of any corporation which controls, directly or indirectly, any general partner), if FRANCHISEE is a partnership (collectively, "Related Parties"). Every covenant required by this Section 11 will be in a form satisfactory to the COMPANY. Failure by FRANCHISEE to obtain execution of a covenant required by this Section will constitute a default under Section 14.2.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, the franchise agreement addresses confidentiality and defines "Related Parties" in that context. Specifically, the agreement states that upon Gold Star's request, franchisees must obtain agreements to keep confidential materials confidential and not use them except as necessary for business operations from certain individuals and entities referred to as "Related Parties".
The Gold Star franchise agreement specifies who constitutes "Related Parties". These include: all managers, officers, and directors of the franchisee; all holders of a beneficial interest of 5% or more of the securities (including membership interests) of the franchisee, and of any corporation or limited liability company directly or indirectly controlling the franchisee (if the franchisee is a corporation or limited liability company); and all general partners of the franchisee (including any corporation, and the officers, directors, and holders of a beneficial interest of 5% or more of the securities of any corporation which controls, directly or indirectly, any general partner), if the franchisee is a partnership.
This definition is important for prospective Gold Star franchisees because it clarifies who they must ensure complies with the confidentiality obligations outlined in the franchise agreement. Franchisees must, upon Gold Star's request, obtain agreements from these "Related Parties" to maintain the confidentiality of the Confidential Materials. Failure to obtain these agreements constitutes a default under the franchise agreement.