For a Gold Star franchise, does the definition of 'Transfer' include issuing membership or partnership interests?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
eunder to any third party at any time, and upon the giving of written notice to FRANCHISEE of any such transfer, COMPANY will have no further responsibility for the performance of any of the transferred obligations. FRANCHISEE shall execute any forms that the COMPANY may reasonably require in connection with any transfer or assignment by the COMPANY.
- 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.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, the definition of "Transfer" includes the issuance of membership or partnership interests. Gold Star requires franchisees to obtain prior written consent from the company before transferring any interest in the franchise. This restriction applies to various forms of transfer, including the issuance of stock, membership, or partnership interests.
Gold Star emphasizes that the franchise is granted based on the individual or collective character, skill, aptitude, and business and financial capacity of the franchisee and its principals. To maintain this standard, any change in ownership or control, such as issuing additional equity, requires the company's approval. This ensures that new stakeholders meet Gold Star's requirements for operators or interest holders, including good moral character, credit ratings, business qualifications, and training completion.
Specifically, if a franchisee is a corporation, limited liability company, or partnership, they cannot issue additional stock, membership, partnership, or other ownership interests without complying with Gold Star's rights as outlined in Section 13 of the franchise agreement. Any issuance or transfer of such interests is considered a "Transfer" and is subject to the restrictions detailed in the agreement. This provision is included in partnership and operating agreements, and stock certificates must bear a legend indicating these transfer restrictions.