What happens if a Principal Trainee ceases to own equity in the Gold Star franchise?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
2.1 Number of Trainees. The following persons must attend and successfully complete to the COMPANY's satisfaction the COMPANY's initial training program prior to the earlier of the opening of the Restaurant or the expiration of six (6) months from the date of this Agreement, and any such additional training programs as the COMPANY may from time to time require, including, without limitation, refresher training, workshops for new Products and other programs (each such person, a "Trainee"): (a) if the FRANCHISEE is an individual, either the FRANCHISEE or two (2) persons who are designated as Managers or (b) if the FRANCHISEE is a corporation or limited liability company, either a person who has an interest in FRANCHISEE (each, a "Principal," and collectively, the "Principals") or two (2) persons who are designated as Managers. In the event that a Principal Trainee ceases to own equity in FRANCHISEE or a Manager Trainee ceases to be employed by FRANCHISEE, FRANCHISEE shall, at the COMPANY's option, cause another Principal Trainee or Manager Trainee to
attend and successfully complete the COMPANY's initial training program, such that at all times FRANCHISEE shall comply with the Trainee requirements set forth in this Section 2.1. Any such initial training for replacements Trainees shall be at FRANCHISEE's expense pursuant to Section 2.2 below.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, if a Principal Trainee no longer owns equity in the franchise, Gold Star has the option to require the franchisee to have another Principal Trainee attend and successfully complete the initial training program. This ensures that the franchise operations continue to be managed by adequately trained personnel.
This requirement is in place to maintain Gold Star's standards and operational consistency across all franchise locations. The replacement trainee must fulfill the training requirements outlined in Section 2.1 of the franchise agreement. The franchisee is responsible for covering the expenses associated with the initial training for any replacement trainees, as detailed in Section 2.2.
This policy ensures that someone with an ownership stake is actively involved and properly trained in the Gold Star system. It protects Gold Star's brand and operational integrity by mandating continuous compliance with training standards, even if there are changes in the ownership structure of the franchise. Franchisees should be aware of these potential costs and obligations when considering changes in equity ownership.