Does the Gold Star franchise agreement define 'Restricted Assets' in this section?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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 the 2025 Gold Star Franchise Disclosure Document, the franchise agreement does define "Restricted Assets" within the section addressing franchisee assignment and transfer restrictions. Specifically, Section 13.2 outlines what constitutes "Restricted Assets" in the context of obtaining Gold Star's consent for any transfer or disposition. This definition is crucial because it identifies the specific assets and interests that a franchisee cannot transfer without prior written approval from Gold Star.
"Restricted Assets" include the franchise agreement itself, the Gold Star 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 of control, or all or a material part of the assets pertaining to the store or the business. A "Change-in-Control" is defined as when 50% or more of the voting power of the franchisee is vested in a person or persons different from the person or persons with whom 50% of voting power was vested immediately prior to the transaction or series of transactions.
This definition has significant implications for a prospective Gold Star franchisee. It means that any attempt to transfer, sell, or otherwise dispose of these assets without Gold Star's consent would be a breach of the franchise agreement. This level of control is typical in franchising, as franchisors like Gold Star want to ensure that any new owner or controlling party meets their standards and is capable of maintaining the brand's reputation and operational consistency. The franchisee should carefully consider these restrictions and seek legal counsel to fully understand the implications before signing the franchise agreement.
Furthermore, Gold Star retains the right of first refusal if a franchisee wishes to transfer any of the Restricted Assets. This means that before a franchisee can accept an offer from a third party, they must first offer the assets to Gold Star on the same terms. This provision allows Gold Star to maintain control over who enters the system and to potentially expand its company-owned operations. Franchisees need to be aware of this right, as it could impact their ability to sell their business to a buyer of their choice.