What section of the Gold Star Franchise Agreement defines 'transfer' by the franchisee?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in | Summary |
|---|---|---|
| Franchise Agreement | ||
| k. “Transfer” by you - | Section 13.2 | Includes transfer of contract or assets, certain ownership |
| definition | changes, grant of liens | |
| 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. |
| n. Gold Star’s right of first | Section 13.3 | Gold Star can match any offer |
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, the definition of 'transfer' by the franchisee is found in Section 13.2 of the Franchise Agreement. This section covers the transfer of the franchise contract or its assets, changes in ownership, and the granting of liens.
For a prospective franchisee, understanding this section is crucial because it outlines what actions constitute a transfer and therefore require franchisor approval. This could include not only selling the franchise but also any significant changes in ownership structure or using the franchise as collateral for a loan.
Gold Star maintains the right to approve all transfers, as detailed in Section 13.4. Section 13.4 also specifies the conditions for approval, including that the franchisee is in good standing, the new franchisee meets Gold Star's qualifications, a transfer fee is paid, the purchase agreement is approved, training is arranged for the new franchisee, and releases are signed by the current franchisee. Gold Star also has the right of first refusal to acquire the business, as noted in Section 13.3, meaning they can match any offer made by a potential buyer.
These provisions are typical in franchise agreements, as franchisors want to maintain control over who operates their branded businesses. Franchisees should carefully review these sections with legal counsel to fully understand their obligations and the process for transferring their Gold Star franchise.