If a Gold Star franchisee is convicted of a felony, can the franchise agreement be terminated?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 14.4 Immediate Termination upon Notice.
Upon written notice to FRANCHISEE from the COMPANY, this Agreement and all rights granted FRANCHISEE hereunder shall immediately terminate if any of the following events occur:
- 14.4.1 FRANCHISEE or any of its shareholders, members or partners, or any Manager, is convicted of any felony that is reasonably likely, in the sole opinion of the COMPANY, to affect adversely the Products, the System, the Marks, or the goodwill associated therewith;
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, the franchise agreement can be terminated if a franchisee, their shareholders, members, partners, or any manager is convicted of a felony. However, there is a condition attached to this termination clause.
The conviction must be one that is reasonably likely, in Gold Star's sole opinion, to adversely affect the Products, the System, the Marks, or the goodwill associated with them. This means that not all felony convictions will automatically lead to termination; Gold Star will assess whether the conviction could harm the brand or its operations.
This provision protects Gold Star's brand and reputation by allowing them to disassociate from individuals whose criminal behavior could damage the company's image or business interests. For a prospective franchisee, this highlights the importance of maintaining a clean criminal record and ensuring that all partners and managers do as well. Failure to do so could result in the loss of the franchise.