Is Gold Star required to get franchisee consent to assign the Franchise Agreement?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
ange or changes in the Transfer terms and the COMPANY considers such change or changes material, the COMPANY shall again have the right of first refusal herein provided. The COMPANY's right of first refusal shall be unrestricted and absolute, and the COMPANY shall in all cases have thirty (30) days to consider and act on each offer or any change in terms and conditions of offer. Nothing contained in this Section shall in any way be deemed to impair the COMPANY's discretion in considering, approving or disapproving any request to Transfer or to consent to a Transfer.
- 13.4 Company's Non-Exercise. If the COMPANY elects not to exercise such first right of refusal, such sale or transfer shall not take place without the prior written consent of the COMPANY. The COMPANY shall not be required to give its consent unless, in addition to the requirements of Section 17, the following conditions are met prior to the consummation of the Transfer:
- 13.4.1 FRANCHISEE is not in default of this Agreement, or any other agreement with the COMPANY, or its affiliates, and all of its accrued monetary obligations to the COMPANY or its affiliates have been satisfied;
- 13.4.2 The transferor, and its shareholders, members and partners, have executed a general release, in form and substance satisfactory to the COMPANY (and if applicable, conforming to requirements of local Franchise Law, as such term is defined in Section 22.1, below), of any and all claims against the COMPANY, its affiliates, shareholders, directors, officers and employees;
- 13.4.3 The transferee has demonstrated to the COMPANY's satisfaction that it meets all of the COMPANY's then-current requirements for new operators or for holders of an interest in a franchise, including, without limitation, possession of good moral character and reputation, satisfactory credit ratings, acceptable business qualifications, satisfactory completion of training programs, and the ability to comply fully with the terms of the then-current franchise agreement;
- 13.4.4 The transferee will enter into a written assumption, in a form satisfactory to the COMPANY, assuming and agreeing to discharge all of
- FRANCHISEE's obligations under this Agreement prior to and after the date of assumption;
- 13.4.5 The transferee shall have paid the COMPANY its then-current transfer fee. The amount of the transfer fee shall be set by the COMPANY from time to time in the exercise of its absolute discretion. The transfer fee as of the date of this Agreement, but subject to change, is Three Thousand Five Hundred Dollars ($3,500.00).
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, franchisees generally need Gold Star's consent to transfer their franchise agreement. Gold Star has the first right of refusal for any proposed sale or transfer. If Gold Star chooses not to exercise this right, the transfer can only proceed with Gold Star's prior written consent.
Several conditions must be met before Gold Star grants its consent. The franchisee must not be in default of any agreements with Gold Star or its affiliates and must have satisfied all accrued monetary obligations. The transferring party must execute a general release of claims against Gold Star and its affiliates. The proposed transferee must meet Gold Star's current requirements for new operators, including demonstrating good moral character, satisfactory credit ratings, acceptable business qualifications, and successful completion of training programs. The transferee must also execute Gold Star's then-current form of franchise agreement.
There is an exception to these transfer restrictions. A franchisee who is an individual may transfer their interest in the franchise to an entity formed solely for ownership convenience without Gold Star's consent, provided they give written notice and meet specific requirements. These requirements include the new entity's activities being confined to operating the business, the entity's name not containing "Gold Star Chili" or similar marks, and compliance with Section 17 of the agreement. This exception allows for some flexibility in structuring ownership without requiring franchisor approval, as long as the franchisee remains compliant with the outlined conditions.
Gold Star also stipulates that no transfer of the franchise agreement can occur through any voluntary or involuntary proceeding such as bankruptcy or assignment for the benefit of creditors. Any attempt to transfer the agreement in this way will be considered null and void, protecting Gold Star's interests in maintaining control over who operates its franchises.