Can the Gold Star Brand Building Fund be used to defray the company's expenses?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 9.3.2 Upon receipt of any Brand Building Fees, the COMPANY or its designee may withhold and apply a portion of such remittance for the purpose of defraying such reasonable salaries, administrative costs and overhead as the COMPANY or its designee may incur in connection with the activities described in Section 9.3.5, below.
The balance of any remittance remaining after such withholding will constitute a contribution paid by FRANCHISEE to the Brand Building Fund to be used exclusively for the purposes described in Section 9.3.3, below.
9.3.3 The Brand Building Fund, all contributions thereto, and any earnings thereon shall be used exclusively to meet any and all costs of maintaining, administering, directing and preparing local, regional and/or national advertising, promotional and public relations activities, including, among other things, the cost of creating, preparing, producing and conducting television, radio, magazine and newspaper advertising campaigns; direct mail and outdoor billboard advertising; marketing surveys and other public relations activities; employing advertising agencies and marketing, advertising and other consultants to assist therein; and providing promotional brochures and other marketing materials.
9.3.4 All contributions paid by franchisees to the Brand Building Fund shall be maintained in an account separate from the other monies of the COMPANY (or its designee), and shall not be used to defray any of the COMPANY's (or its designee's) expenses, except to repay any advances made by the COMPANY or such designee to the Brand Building Fund.
The Brand Building Fund and the earnings therefrom shall not otherwise inure to the benefit of the COMPANY or its designee.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, the Brand Building Fund can be used to defray some of the company's expenses. Specifically, Gold Star or its designee can withhold a portion of the Brand Building Fees to cover reasonable salaries, administrative costs, and overhead incurred in connection with administering the fund's activities.
However, the FDD stipulates that the remaining balance of the Brand Building Fees, after these deductions, must be used exclusively for maintaining, administering, and directing advertising, promotional, and public relations activities. This includes costs associated with creating advertising campaigns across various media, conducting marketing surveys, employing advertising agencies and consultants, and providing promotional materials.
The contributions paid by franchisees to the Brand Building Fund must be maintained in a separate account from Gold Star's other monies. These funds cannot be used to defray Gold Star's expenses, except to repay any advances the company made to the Brand Building Fund. The Brand Building Fund and its earnings should not otherwise benefit Gold Star, ensuring that the funds are primarily used for the benefit of the franchise system's marketing and advertising efforts.