Under what circumstances is a transfer of a Gold Star franchise considered null and void?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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.
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, a transfer of the franchise agreement is considered null and void under specific circumstances related to legal proceedings and equity issuance.
Specifically, any attempt to transfer the franchisee's rights under the agreement through voluntary or involuntary proceedings such as bankruptcy, receivership, attachment, execution, or assignment for the benefit of creditors is deemed null and void. This means that if a franchisee faces financial difficulties leading to such legal actions, their rights to the Gold Star franchise cannot be transferred through these processes.
Additionally, if the franchisee is a corporation, limited liability company, or partnership, the issuance of any additional stock, membership, partnership, or other ownership interests, or any transfer of such interests, without complying with the company's rights as outlined in Section 13 of the franchise agreement, will also be considered a transfer and is therefore null and void. This restriction is further reinforced by requiring all partnership and operating agreements to contain provisions setting forth these restrictions, and all stock certificates to have a specific legend endorsed on them, referencing the terms and conditions of the franchise agreement.