Is Golden Corral required to approve all transfer requests?
Golden_Corral Franchise · 2025 FDDAnswer from 2025 FDD Document
poration.
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.
Source: Item 22 — CONTRACTS (FDD pages 84–85)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, Golden Corral franchisees operating as corporations, partnerships, or limited liability companies face specific requirements regarding ownership transfers. Specifically, if a franchisee is a corporation, each proposed holder of an interest in the franchisee must submit a franchise application to Golden Corral for approval. Upon request from Golden Corral, the proposed holder must also execute a guarantee of the franchisee's obligations under the Franchise Agreement. However, these requirements do not apply to holders of any corporation registered under the Securities and Exchange Act of 1934.
Similarly, if an Area Developer is a corporation, each proposed holder of an interest in the Area Developer must submit a franchise application to Golden Corral for approval. Upon Golden Corral's request, they must also execute a guarantee of the Area Developer's obligations under the Development Agreement. This requirement does not apply to holders of corporations registered under the Securities and Exchange Act of 1934.
These stipulations mean that Golden Corral retains significant control over who becomes an owner or holder of interest in a Golden Corral franchise or Area Development business. The approval process allows Golden Corral to vet potential owners and ensure they meet the company's standards. The guarantee requirement further protects Golden Corral by ensuring that new owners are financially committed to fulfilling the franchise or development agreement obligations. However, the exception for publicly traded companies indicates a recognition that closely scrutinizing shareholders of large, publicly held entities is impractical.