What restrictions must each holder of an interest in the Gold Star Franchise Agreement agree to be personally bound by?

According to Gold Star's 2025 Franchise Disclosure Document, all individuals holding an interest in the franchise must guarantee all of the franchisee's obligations under the Franchise Agreement. They must also agree to be personally bound by the confidentiality, noncompete, and transfer provisions outlined in the Franchise Agreement. This requirement is further detailed in Section 17.2 and Exhibit B of the Franchise Agreement.

This provision has significant implications for prospective Gold Star franchisees. It means that anyone with an ownership stake in the franchise—whether a shareholder, partner, or other type of investor—must be willing to personally guarantee the franchisee's obligations. This guarantee extends to the confidentiality, non-compete, and transfer clauses, meaning these individuals could be held personally liable if the franchise violates these terms.

For example, if the Gold Star franchise discloses confidential information, competes with the franchise system during or after the franchise term, or attempts to transfer the franchise without proper approval, all holders of interest could be held personally responsible for the breach. This is a common practice in franchising, as it ensures that all parties with a financial stake in the business are committed to upholding the terms of the agreement and protecting the franchisor's interests.

Prospective franchisees should carefully consider this requirement and ensure that all individuals with an interest in the franchise are fully aware of the obligations and potential liabilities involved. It is advisable to consult with legal counsel to fully understand the implications of these personal guarantees and restrictions before entering into a Franchise Agreement with Gold Star.