When transferring a Gold Star franchise, is a release required from the franchisee's shareholders and partners?
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 Gold Star's 2025 Franchise Disclosure Document, when a franchisee seeks to transfer their franchise, a release must be signed by the franchisee, their shareholders, and partners as a condition for Gold Star's approval of the transfer. This requirement is part of a set of conditions that Gold Star may impose when a franchisee wants to transfer ownership.
This condition means that all parties with a significant interest in the franchise, not just the franchisee themselves, must formally agree to release Gold Star from any potential liabilities or claims related to the transfer. This is a protective measure for Gold Star, ensuring that all stakeholders are in agreement and that no future legal issues arise from the transfer process. The release likely covers any past, present, or future claims related to the franchise agreement.
In addition to the release, Gold Star also requires that the franchisee be in good standing, the new franchisee meets Gold Star's qualifications, a transfer fee is paid, the purchase agreement is approved, and training is arranged for the new franchisee. The new franchisee must also sign the current franchise agreement and related documents. These conditions collectively ensure that any transfer maintains the standards and protects the interests of the Gold Star franchise system.
It is important to note that under the Small Business Association Addendum, Gold Star may not unreasonably withhold, condition, or delay its consent to the transfer. However, the requirement for a release from the franchisee, shareholders, and partners remains a standard condition for transfer approval.