Can the Area Developer's obligations to Golden Corral be altered?
Golden_Corral Franchise · 2025 FDDAnswer from 2025 FDD Document
-site evaluations for each Restaurant at Franchisor's cost; for each additional on-site evaluation (if any) Area Developer shall
reimburse Franchisor for Franchisor's reasonable expenses, including, without limitation, the costs of travel, lodging, and food.
- 5.2. Area Developer's Obligations: Area Developer accepts the following obligations:
- 5.2.1. An Area Developer which is a corporation shall comply, except as otherwise approved in writing by Franchisor, with the following requirements throughout the term of this Development Agreement:
- 5.2.1.1. Area Developer shall furnish Franchisor with its Articles of Incorporation, Bylaws, other governing documents, any other documents Franchisor may reasonably request, and any amendments thereto.
- 5.2.1.2. Area Developer shall confine its activities, and its governing documents, if any, shall at all times provide that its activities are confined, exclusively to the management and operation of the business contemplated hereunder, including the establishment and operation of the Restaurants to be developed hereunder.
- 5.2.1.3. Area Developer shall maintain stop transfer instructions against the transfer on its records of any voting securities; and shall issue no certificates for voting securities upon the face of which the following printed legend does not legibly and conspicuously appear:
The transfer of this stock is subject to the terms and conditions of an Area Development Agreement with GOLDEN CORRAL FRANCHISING SYSTEMS, INC. dated . Reference is made to the provisions of the said Area Development Agreement and to the Articles and Bylaws of this Corporation.
5.2.1.4. Area Developer shall maintain a current list of all owners of record and all beneficial owners of any class of voting stock of Area Developer and shall furnish the list to Franchisor upon request. Such lists shall also include the percentage of ownership of each such owner.
5.2.2. If Area Developer is a corporation, each proposed holder of an interest in Area Developer shall submit a franchise application to Franchisor, shall be approved by Franchisor, and shall, upon Franchisor's request, execute a guarantee of Area Developer's obligations under this Development Agreement in a form prescribed by Franchisor; provided, however, that the requirements of this Section 5.2. shall not apply to a holder of any corporation registered under the Securities and Exchange Act of 1934.
5.2.3. An Area Developer which is a partnership shall comply, except as otherwise approved in writing by Franchisor, with the following requirements throughout the term of this Development Agreement:
5.2.3.1. Area Developer shall furnish Franchisor with its partnership agreement as well as such other documents as Franchisor may reasonably request, and any amendments thereto.
5.2.3.2.. Area Developer shall prepare and furnish to Franchisor, upon request, a list of all general and limited partners in Area Developer.
5.2.4. If Area Developer is a limited liability company, it shall: (i) furnish Franchisor with its articles of organization and operating agreement, as well as such other documents as Franchisor may reasonably request, and any amendments thereto; (ii) prepare and furnish to Franchisor, upon request, a current list of all members and managers in Area Developer; and (iii) maintain stop transfer instructions on its records against the transfer of any equity securities and shall only issue securities which bear a legend, in a form satisfactory to Franchisor, which references the transfer restrictions imposed by this Development Agreement.
5.2.4.1. If Area Developer is a limited liability company, each proposed holder of an interest in Area Developer shall submit a franchise application to Franchisor, shall be approved by Franchisor, and shall, upon Franchisor's request, execute a guarantee of Area Developer's obligations under this Development Agreement in a form prescribed by Franchisor.
5.2.5. Area Developer shall at all times preserve in confidence any and all materials and information furnished or disclosed to Area Developer by Franchisor and shall disclose such information or materials only to such of Area Developer's employees or agents who must have access to it in connection with their employment.
Source: Item 22 — CONTRACTS (FDD pages 84–85)
What This Means (2025 FDD)
According to Golden Corral's 2025 Franchise Disclosure Document, the Area Developer's obligations can be altered under specific conditions. The franchisor, Golden Corral, retains the right to transfer or assign its rights and obligations under the Development Agreement to another party. If this occurs, the assignee must expressly assume and agree to perform all of Golden Corral's obligations from the date of assignment, becoming solely responsible for them.
Furthermore, the Area Developer's obligations as a corporation require adherence to certain conditions unless otherwise approved in writing by Golden Corral. These conditions include providing corporate documents, confining business activities to the management and operation of Golden Corral restaurants, maintaining stop transfer instructions on voting securities, and providing a current list of all beneficial owners of voting stock. Any proposed holder of interest in the Area Developer corporation must submit a franchise application and be approved by Golden Corral, and may be required to guarantee the Area Developer's obligations.
Additionally, Golden Corral may exercise its Development Right to conduct research and negotiations regarding sites within the Development Area. The Area Developer is obligated to accept an assignment and assumption of any Land Contract and Related Agreements if the seller or landlord allows assignment with a complete release of Golden Corral. Failure to notify Golden Corral of the desire to accept these assignments within a specified Notice Period can result in the termination of the Development Agreement. These provisions indicate that the Area Developer's obligations are subject to potential alterations based on Golden Corral's actions and approvals, as well as the Area Developer's adherence to specific requirements and timelines.