Does Gold Star have the right to approve all transfers of a Gold Star franchise?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in | Summary |
|---|---|---|
| Franchise Agreement | ||
| l. Gold Star’s approval of transfer by Franchisee | Section 13.4 and the Small Business Association Addendum if applicable | Gold Star has the right to approve all transfers (also see (n) below) |
| m. Conditions for Gold Star approval of transfer | Section 13.4 and the Small Business Association Addendum if applicable | Gold Star not obligated to approve any transfer--minimum conditions include: you are in good standing; new franchisee qualifies; transfer fee paid; purchase agreement approved; training arranged; release signed by you (and your shareholders and partners) and current agreement and related documents signed by new franchisee (also see (n) and (r), below); Under the Small Business Association Addendum, Gold Star may not unreasonably withhold, condition, or delay its consent. |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 42–45)
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, Gold Star retains the right to approve all transfers of a franchise. This is detailed in Item 17, which summarizes key provisions of the franchise agreement related to transfer.
The FDD specifies that Gold Star is not obligated to approve any transfer. To be considered for approval, a franchisee must meet certain minimum conditions. These include being in good standing with Gold Star, ensuring the new franchisee meets Gold Star's qualifications, paying a transfer fee, securing approval of the purchase agreement, arranging for training for the new franchisee, and obtaining a release signed by the current franchisee (and their shareholders and partners). The new franchisee must also sign the current franchise agreement and related documents.
However, the Small Business Association Addendum places a constraint on Gold Star's approval rights. Under this addendum, Gold Star may not unreasonably withhold, condition, or delay its consent to a transfer. This provision offers some protection to franchisees, ensuring that Gold Star's decisions regarding transfer approvals are fair and reasonable, especially when the franchise is subject to the Small Business Association Addendum.