What is Gold Star Chili, Inc.'s obligation regarding unfair competition with a licensee in Indiana?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
In recognition of the requirements of the Indiana Disclosure Law, Indiana Code §§ 23-2- 2.5-1 to 23-2-2.5-51 and the Indiana Deceptive Franchise Practices Act, Indiana Code §§ 23-2- 2.7-1 to 23-2-2.7-7, the parties to the attached Gold Star Chili, Inc. Franchise Agreement (the "Agreement") agree as follows:
-
- Section 1 of the Agreement, under the heading "Grant of Franchise," shall be supplemented by the following subsection 1.7, which shall be considered an integral part of the Agreement:
- "C. No Unfair Competition. Licensor agrees that it shall not compete unfairly with Licensee within a reasonable area surrounding the approved location of the licensed location."
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, an addendum to the franchise agreement is required by the state of Indiana. This addendum addresses Gold Star's obligations regarding unfair competition with its licensees in Indiana.
Specifically, Gold Star agrees that it will not compete unfairly with a licensee within a reasonable area surrounding the approved location of the licensed Gold Star restaurant. This provision is considered an integral part of the franchise agreement for franchisees operating in Indiana.
This protection against unfair competition is designed to safeguard the franchisee's investment and business within their designated territory. The term "reasonable area" is not defined in the FDD and would likely be subject to interpretation based on factors such as population density, market conditions, and geographic barriers. A prospective franchisee should seek clarification from Gold Star regarding how this "reasonable area" is determined to fully understand the scope of this protection.