Is a Gold Star franchisee's lease considered a restricted asset?
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.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, a franchisee's lease is considered a restricted asset. This means that the franchisee faces restrictions if they want to transfer, assign, or make any disposition of their lease.
Specifically, Gold Star maintains control over the franchise location by defining the lease as a restricted asset. The FDD states that franchisees cannot sell, assign, transfer, convey, issue, lease, pledge, mortgage, encumber, or make any disposition of the lease without prior written consent from Gold Star. This gives Gold Star significant oversight regarding who operates at the retail location.
This restriction allows Gold Star to protect its brand and ensure consistent operation standards across all franchise locations. For a prospective franchisee, this means they cannot freely sublease or transfer their location to another party without Gold Star's approval, even if they sell the business. This could limit the franchisee's flexibility and options should they decide to exit the business or change locations.