Under what conditions is Gold Star not required to give consent for a franchise transfer?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, there is a specific exception to the transfer restrictions where Gold Star's consent is not required. If the franchisee is an individual, they may transfer their interest in the franchise to an entity formed solely for ownership convenience without obtaining Gold Star's consent. However, this is contingent upon providing written notice to Gold Star and meeting certain requirements.
The requirements include that the newly formed entity's activities are confined exclusively to operating the Gold Star business. Additionally, the entity's name cannot include "Gold Star Chili" or any similar variation, or any mark in which Gold Star claims a proprietary interest. Furthermore, both the franchisee and its principals must comply with all the requirements outlined in Section 17 of the franchise agreement.
This exception provides a degree of flexibility for individual franchisees who wish to structure their business ownership through a separate legal entity for liability or other business planning purposes. However, it's crucial for franchisees to adhere strictly to the outlined conditions to avoid violating the transfer restrictions and potentially breaching the franchise agreement. Franchisees should carefully review Section 17 of the agreement to fully understand the requirements for themselves and their principals.