Does Gold Star have a right of first refusal if a franchisee wants to transfer their franchise?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
A "Change-in-Control" transaction or series of transactions shall occur when 50% or more of the voting power of FRANCHISEE is vested in a person or persons (as applicable) different from the person or persons (as applicable) with whom 50% of voting power was vested immediately prior to the transaction or series of transactions. For purposes of this subparagraph, all transfers of an ownership interest in a nonindividual franchisee occurring since the date the entity first became a franchisee will be aggregated to determine whether a Change-in-Control has occurred.
- 13.3 Company's Right of First Refusal. Notwithstanding anything contained in this Agreement to the contrary, if FRANCHISEE or any Principal wishes to Transfer or accept an offer to Transfer, in any manner whatsoever, all or any part of any of the Restricted Assets, or any interest therein, FRANCHISEE or its Principals, as the case may be, will first obtain a bona fide, executed, written offer from a fullydisclosed purchaser and will submit an exact copy thereof to the COMPANY. After the receipt by the COMPANY of such offer, the COMPANY shall have thirty (30) days to purchase the Restricted Assets for the price and on the terms and conditions contained in the written proposed offer. Failure of the COMPANY to accept such offer within said thirty (30) days shall constitute a rejection (provided that the COMPANY may substitute cash for any form of payment proposed in such offer and shall have not less than sixty (60) days to prepare for
closing). If the COMPANY does not exercise its right of first refusal, FRANCHISEE or such transferor shall have ninety (90) days from the date of the COMPANY's rejection to Transfer the subject property in accordance with this Section, and subject to the COMPANY's approval pursuant to Section 13.4, below, but only upon terms and conditions no more favorable than those offered to the COMPANY. Before consummation of a Transfer to any third party, FRANCHISEE shall submit a copy of all Transfer documentation (signed by the parties, but expressly subject to the COMPANY's right of first refusal) to the COMPANY at least thirty (30) days in advance of any proposed consummation or closing date for the COMPANY's review and comparison with the offer previously submitted to it. If there has been a change 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.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, Gold Star does have a right of first refusal if a franchisee wishes to transfer their franchise. If a franchisee or any principal wishes to transfer any part of the restricted assets, they must first obtain a written offer from a purchaser and submit a copy to Gold Star.
Gold Star then has 30 days to decide whether to purchase the assets at the price and terms of the offer. Gold Star can substitute cash for any proposed form of payment and has at least 60 days to prepare for closing. If Gold Star doesn't accept the offer within 30 days, it's considered a rejection. The franchisee then has 90 days to transfer the property, subject to Gold Star's approval, but only under the same terms as the original offer.
Before the transfer to a third party, the franchisee must submit all transfer documents to Gold Star at least 30 days before the proposed closing date. This allows Gold Star to review and compare the documents with the original offer. If there are any material changes to the transfer terms, Gold Star has the right of first refusal again.
Gold Star's right of first refusal is unrestricted, and the company has 30 days to consider each offer or any changes to the terms. However, even if Gold Star chooses not to exercise its right of first refusal, the sale or transfer cannot occur without Gold Star's prior written consent. The transfer fee as of the date of the agreement is $3,500, but is subject to change.