Against what amounts due from Gold Star can the franchisee's debts be set off?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
Any amounts owed to the COMPANY or any of its affiliates by FRANCHISEE may be set off by the COMPANY or any of its affiliates against any amounts due from the COMPANY for the purchase of assets under Section 15.2 above.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, Gold Star or its affiliates can offset any amounts the franchisee owes them against any amounts Gold Star owes the franchisee for the purchase of assets under Section 15.2 of the franchise agreement. This means that if a franchisee owes Gold Star money for any reason, Gold Star can deduct that amount from any payment they owe the franchisee for purchasing the franchisee's assets.
This right of setoff provides Gold Star with a financial protection mechanism. If a franchisee is in debt to Gold Star, Gold Star can ensure they receive at least partial payment by offsetting it against any money owed to the franchisee during a purchase of assets. This could occur, for example, if Gold Star purchases the franchisee's restaurant location or equipment.
For a prospective franchisee, this clause highlights the importance of maintaining good financial standing with Gold Star. Any outstanding debts could reduce the amount the franchisee receives if Gold Star decides to purchase their assets. Franchisees should carefully review Section 15.2 of the franchise agreement to understand the specific circumstances under which Gold Star might purchase assets and how the setoff would be calculated.