Are all amounts payable by a Gold Star franchisee unconditional?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 8.4 Payments Unconditional.
All amounts payable by FRANCHISEE to the COMPANY or any affiliate under or in connection with this Agreement shall be made without set-off or deduction for any reason whatsoever (including but not limited to any alleged breach by the COMPANY of any obligations to FRANCHISEE), and if not paid when due shall bear interest from the date due until paid at the rate of one and one-half percent (1.5%) per month, or the maximum rate permitted by law, whichever is less.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, all amounts payable by a franchisee to Gold Star or its affiliates are indeed unconditional. This means that franchisees must make all payments without any set-off or deduction, regardless of any alleged breach of obligations by Gold Star.
This requirement has significant implications for prospective franchisees. It means that even if a franchisee believes Gold Star has failed to meet its obligations under the franchise agreement, the franchisee is still obligated to make all payments as scheduled. Failure to do so can result in penalties, including interest charges. The FDD specifies that overdue amounts will incur interest at a rate of 1.5% per month, or the maximum rate permitted by law, whichever is less.
Such a clause is not uncommon in franchise agreements, as it protects the franchisor's revenue stream and ensures consistent payments. However, it places a considerable financial burden on the franchisee, who must continue to pay even if they have legitimate grievances against the franchisor. Franchisees should be aware of this unconditional payment obligation and carefully consider its potential impact on their business. It is advisable to seek legal counsel to fully understand the implications of this clause and to assess the risks involved before entering into a franchise agreement with Gold Star.