Can a Gold Star franchisee publicly advertise the transfer of their franchise without the company's consent?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, franchisees are prohibited from publicly advertising or offering the transfer of their franchise without prior written consent from Gold Star. This restriction applies to any part of the franchise, including the franchise agreement, the business, the store, the retail location, any lease, 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 different person or persons than before.
This requirement means that if a franchisee wishes to sell their Gold Star franchise, they must first obtain Gold Star's approval before advertising the sale. This allows Gold Star to maintain control over who becomes a franchisee and ensures that any potential buyer meets their standards. The written consent requirement protects Gold Star's brand and reputation by ensuring that only qualified and approved individuals or entities take over existing franchises.
This restriction is typical in franchising, as franchisors want to carefully vet potential new franchisees to ensure they are a good fit for the system. A prospective franchisee should be aware of this restriction and factor in the time it may take to get Gold Star's approval when planning to sell their franchise. Failing to obtain written consent before advertising a transfer would be a breach of the franchise agreement.