What happens if a Gold Star franchisee assigns or transfers interest in restricted assets?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
preparation or sale of any food items similar to the Products or any other business similar to the Restaurants, the Business or the System or that offers or grants franchises or licenses to others to operate such a business.
- 11.1.2 During the term of this Agreement and all extensions of renewal thereof and for three (3) years thereafter, FRANCHISEE shall not let or permit any part of any premises owned or controlled by FRANCHISEE in the Protected Territory to be used for a business, all or any part of which consists of a Similar Business.
- 11.1.3 Upon expiration or termination of this Agreement for any reason, or if FRANCHISEE assigns or transfers its interest in any Restricted Assets in any manner, then for a period of three (3) years thereafter, FRANCHISEE shall not, in any capacity whatsoever, either directly or indirectly, for itself, himself or herself, or through, on behalf of or in conjunction with any other person, partnership, limited liability company, corporation or organization, own, operate, maintain, engage in, participate in (as director, officer, manager, employee, consultant, representative, agent or otherwise) have any interest whatsoever in any Similar Business at a location within a radius of ten (10) miles of the Retail Location or any other Restaurant site then existing or approved for development.
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 assigns or transfers interest in restricted assets, several consequences may arise. Gold Star emphasizes that the franchise is granted based on the individual or collective character, skills, aptitude, and business and financial capacity of the franchisee and its principals. Therefore, any unauthorized transfer of restricted assets is strictly prohibited.
Specifically, any attempt to transfer the franchisee's interest in the agreement without prior written consent from Gold Star will be considered null and void. Furthermore, upon the expiration or termination of the agreement, or if the franchisee assigns or transfers its interest in any restricted assets, the franchisee is restricted from engaging in any similar business within a 10-mile radius of the retail location or any other restaurant site for a period of three years. This restriction applies in any capacity, whether directly or indirectly, and includes owning, operating, maintaining, or participating in any similar business.
Additionally, during the term of the agreement and for three years after, the franchisee is prohibited from diverting Gold Star's business or customers to any similar business, inducing Gold Star employees to leave their employment, or performing any act injurious or prejudicial to Gold Star's goodwill associated with its marks and system. These measures are in place to protect Gold Star's interests and ensure the franchisee's commitment to the brand and its standards.