What must the transferee demonstrate to Gold Star's satisfaction before a franchise transfer can occur?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
ange 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. 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;
- 13.4.2 The transferor, and its shareholders, members and partners, have executed a general release, in form and substance satisfactory to the COMPANY (and if applicable, conforming to requirements of local Franchise Law, as such term is defined in Section 22.1, below), of any and all claims against the COMPANY, its affiliates, shareholders, directors, officers and employees;
- 13.4.3 The transferee has demonstrated to the COMPANY's satisfaction that it meets all of the COMPANY's then-current requirements for new operators or for holders of an interest in a franchise, including, without limitation, possession of good moral character and reputation, satisfactory credit ratings, acceptable business qualifications, satisfactory completion of training programs, and the ability to comply fully with the terms of the then-current franchise agreement;
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, a prospective transferee must meet several requirements to gain approval. The transferee must demonstrate that they meet all of Gold Star's current requirements for new operators or those holding an interest in a franchise. These requirements include possessing good moral character and reputation, satisfactory credit ratings, acceptable business qualifications, and satisfactory completion of training programs. Additionally, the transferee must prove their ability to comply fully with the terms of the then-current franchise agreement.
Furthermore, the transferee must enter into a written agreement, in a form satisfactory to Gold Star, to assume and agree to fulfill all of the franchisee's obligations under the existing franchise agreement, both before and after the date of assumption. The transferee is also required to pay Gold Star the then-current transfer fee. As of the date of the Franchise Agreement, the transfer fee is $3,500.00, but this fee is subject to change at Gold Star's discretion.
These conditions ensure that any new franchisee taking over an existing Gold Star location meets the brand's standards and is fully committed to upholding the franchise agreement. This protects the reputation and consistency of the Gold Star brand. Prospective franchisees should be aware of these requirements and prepared to meet them if they plan to transfer a franchise in the future.