What is the requirement regarding default status for a Gold Star franchisee seeking to transfer their franchise?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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;
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, a franchisee must not be in default of the Franchise Agreement or any other agreement with Gold Star or its affiliates to transfer their franchise. Additionally, all accrued monetary obligations to Gold Star or its affiliates must be satisfied before the transfer can be approved. This requirement ensures that the franchisee is in good standing with Gold Star before transferring the business to a new owner.
This condition protects Gold Star by ensuring that franchisees meet their financial and contractual obligations before transferring the franchise. It also helps maintain the integrity and reputation of the Gold Star brand by ensuring that new franchisees are not burdened with unresolved issues from the previous owner.
For a prospective Gold Star franchisee, this means staying current with all payments and adhering to the terms of the Franchise Agreement. Failure to do so could prevent the franchisee from being able to sell or transfer the franchise in the future. It is a fairly standard clause in franchise agreements to ensure brand consistency and protect the franchisor's interests.