To whom must the interest of a deceased or incapacitated person or entity in a Gold Star franchise be transferred?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 13.8 Death or Disability of Person with Controlling Interest.
Upon the death or permanent incapacity of any person with a direct or indirect controlling interest in this franchise or in FRANCHISEE, and upon the dissolution of a FRANCHISEE that is a partnership, limited liability company, or corporation, or the death or permanent incapacity of a FRANCHISEE that is a natural person, the executor, administrator, personal representative or trustee of such person or entity shall transfer his or its interest to a third party approved by the COMPANY within six (6) months.
Such Transfer, including, without limitation, transfers by devise or inheritance, shall be subject to the same conditions of this Section 13 as an intervivos Transfer.
However, in the case of Transfer by devise or inheritance, if the heirs or devisees of any such person are unable to meet the conditions in Section 13.4, the personal representative of the deceased FRANCHISEE shall have a reasonable time to dispose of the decedent's interest in the franchise, which disposition shall be subject to all applicable terms and conditions for transfers contained in this Agreement.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, in the event of the death or permanent incapacity of a person with a controlling interest in the franchise, or the dissolution of a franchisee entity (partnership, LLC, or corporation), or the death/incapacity of a franchisee who is a natural person, the interest must be transferred to a third party approved by Gold Star within six months. This responsibility falls to the executor, administrator, personal representative, or trustee of the deceased or incapacitated party.
This transfer is subject to the same conditions outlined in Section 13 of the franchise agreement as any other transfer made during the franchisee's lifetime. However, if the heirs or devisees are unable to meet the conditions in Section 13.4, the personal representative has a reasonable time to dispose of the decedent's interest, subject to all applicable terms and conditions for transfers contained in the agreement.
This clause ensures that Gold Star maintains control over who operates its franchises, even in unforeseen circumstances. For a prospective franchisee, this means planning for business succession is crucial. Franchisees should consult legal and financial advisors to create a plan that aligns with Gold Star's requirements and protects their family's interests, while also ensuring a smooth transition of the business in case of death or incapacitation. The need for Gold Star's approval highlights the importance of identifying potential successors who would likely meet the franchisor's criteria.