Under what conditions may Gold Star unreasonably withhold, condition, or delay its consent to a transfer according to the Small Business Association Addendum?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in | Summary |
|---|---|---|
| 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 the 2025 Gold Star Franchise Disclosure Document, Gold Star has the right to approve all transfers. However, under the Small Business Association Addendum, Gold Star may not unreasonably withhold, condition, or delay its consent to a transfer.
Prior to a transfer, franchisees must be in good standing, the new franchisee must qualify, the transfer fee must be paid, the purchase agreement must be approved, training must be arranged, and a release must be signed by the franchisee (and their shareholders and partners). The current agreement and related documents must also be signed by the new franchisee.
This provision provides some protection to franchisees who have SBA loans, ensuring that Gold Star cannot arbitrarily prevent a sale of the franchise if the franchisee meets the specified conditions and the transfer is otherwise reasonable. This can be a significant benefit, as it allows franchisees more flexibility in exiting the business if they choose to do so.