What must the governance documents of the Gold Star franchisee recite regarding the issuance and transfer of any interest therein?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 17.3 Governance Documents. The partnership agreement, articles of incorporation, articles of organization, operating agreement, bylaws and other organization documents of FRANCHISEE shall recite that the issuance and transfer of any interest therein is restricted by the terms of Section 13 of the Agreement. FRANCHISEE shall also submit to the COMPANY, upon the execution of this Agreement, resolutions from the applicable governing body of FRANCHISEE which authorize the execution, delivery and performance of this Agreement and the transactions contemplated hereby and states, in form and substance, that no shares or other interest in FRANCHISEE shall be issued, transferred or assigned to any person or legal entity except according to the terms of this Agreement.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, if a franchisee is a partnership, corporation, or other legal entity, its governance documents must explicitly state that any issuance or transfer of interest is restricted by the terms outlined in Section 13 of the Franchise Agreement. This requirement ensures that all parties involved are aware that the transfer of ownership or equity is subject to Gold Star's approval and conditions.
Furthermore, the franchisee must submit resolutions from its governing body to Gold Star upon the execution of the Franchise Agreement. These resolutions must authorize the execution, delivery, and performance of the agreement and transactions. The resolutions must also state that no shares or other interests in the franchisee will be issued, transferred, or assigned to any person or legal entity except according to the terms of the Franchise Agreement.
This provision is designed to protect Gold Star's interests by maintaining control over who becomes a franchisee and ensuring that all franchisees meet the company's standards. It also helps to maintain the consistency and quality of the Gold Star brand. Prospective franchisees should carefully review Section 13 of the Franchise Agreement to understand the specific restrictions and conditions related to the transfer of ownership or equity.