Is transferring partnership interest by a Gold Star franchisee considered a transfer?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
If FRANCHISEE or any proposed transferee is a corporation, limited liability company or partnership, such entity shall not issue any additional stock, membership, partnership or other ownership interests or permit any transfer of any such interest, and each stockholder, member or partner thereof shall, in writing, agree not to issue, assign, transfer, pledge, sell or otherwise convey all or part of any capital stock, membership interest or partnership interest in FRANCHISEE or such transferee, without compliance with the rights of the COMPANY set forth under this Section 13.
For the purpose of clarity, any such issuance or transfer will be considered a "Transfer" pursuant to
- this Section 13.
All partnership agreements and operating agreements shall contain provisions setting forth the foregoing restrictions.
All stock certificates shall have endorsed on them the legend set forth in Section 17.4, below.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, the transfer of a partnership interest is considered a "Transfer" under the terms of the franchise agreement. Specifically, if a franchisee is a partnership, it cannot permit any transfer of any partnership or other ownership interests without complying with the conditions outlined in Section 13 of the agreement.
This means that any issuance or transfer of stock, membership, partnership, or other ownership interests in the Gold Star franchise must adhere to the transfer restrictions detailed in the franchise agreement. These restrictions are in place to ensure that Gold Star maintains control over who becomes a franchisee and to protect the brand's integrity.
For a prospective Gold Star franchisee, this implies that if the franchise is owned by a partnership, any changes in the ownership structure, such as the addition or removal of partners or the transfer of partnership interests, will be subject to Gold Star's approval. The franchisee must ensure that all partners are aware of and comply with these transfer restrictions, as failure to do so could result in a breach of the franchise agreement. Additionally, all partnership agreements must contain provisions that reflect these transfer restrictions. Stock certificates must also have a legend indicating that transfer is subject to the terms of the franchise agreement.