When transferring a Gold Star franchise, what form of agreement must the transferee execute?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
he transferee will enter into a written assumption, in a form satisfactory to the COMPANY, assuming and agreeing to discharge all of
- FRANCHISEE's obligations under this Agreement prior to and after the date of assumption;
- 13.4.5 The transferee shall have paid the COMPANY its then-current transfer fee. The amount of the transfer fee shall be set by the COMPANY from time to time in the exercise of its absolute discretion. The transfer fee as of the date of this Agreement, but subject to change, is Three Thousand Five Hundred Dollars ($3,500.00).
- 13.4.6 The transferee shall have executed the COMPANY's then-current form of franchise agreement for a term equal to the remaining current term of this Agreement, save and except that there shall be no initial franchise fee payable, and the transferee shall execute such other agreements and documents as the COMPANY may reasonably require.
- 13.5 Exceptions to Transfer Restrictions. Notwithstanding the foregoing, FRANCHISEE (if FRANCHISEE is an individual) may Transfer all of its interest in the Restricted Assets to an entity formed solely for the convenience of ownership without the COMPANY's consent, upon FRANCHISEE's written notice to the COMPANY and compliance with the following requirements:
- 13.5.1 FRANCHISEE will be newly organized and its articles of incorporation or organization, bylaws, partnership agreement, or operating agreement will provide that its activities are confined exclusively to operating the Business;
- 13.5.2 Franchisee's name will not consist of or contain the words "Gold Star Chili", or any colorable variation thereof, or any other mark in which the COMPANY has or claims a proprietary interest; and
- 13.5.3 FRANCHISEE and its Principals will comply with all of the requirements set forth in Section 17 below.
- 13.6 No Transfer by Operation of Law. No person or entity shall succeed to any of the rights of FRANCHISEE under this Agreement by virtue of any voluntary or involuntary proceeding in bankruptcy, receivership, attachment, execution, assignment for the benefit of creditors or other legal process. Any such attempt to so transfer FRANCHISEE's interest in this Agreement shall be null and void.
- 13.7 Prohibition on Issuing Equity.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, a transferee must execute the company's current franchise agreement. The term of the agreement will be equal to the remaining term of the original agreement. The transferee will not have to pay an initial franchise fee. The transferee must also execute any other agreements and documents that Gold Star may reasonably require.
Prior to the transfer, the franchisee must not be in default of the franchise agreement or any other agreement with Gold Star or its affiliates. All accrued monetary obligations to Gold Star or its affiliates must be satisfied. The transferor must execute a general release of any and all claims against Gold Star, its affiliates, shareholders, directors, officers, and employees, in a form and substance satisfactory to Gold Star.
The transferee must demonstrate to Gold Star that they meet all of Gold Star's current requirements for new operators or holders of an interest in a franchise. This includes possessing good moral character and reputation, satisfactory credit ratings and business qualifications, satisfactory completion of training programs, and the ability to comply fully with the terms of the then-current franchise agreement. The transferee will also enter into a written assumption, in a form satisfactory to Gold Star, assuming and agreeing to discharge all of the franchisee's obligations under the agreement prior to and after the date of assumption. The transferee must pay Gold Star its then-current transfer fee, which as of the date of the agreement is $3,500, but is subject to change.