What is considered a 'Similar Business' to Gold Star, as defined in the franchise agreement?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding the foregoing, the COMPANY may (x) establish or license another to establish one or more Special Purpose Outlets (as defined below) within the Protected Territory and (y) sell or otherwise distribute within the Protected Territory products similar to or the same as those offered by the Restaurant through alternative channels of distribution (including without limitation grocery and convenience stores and internet, direct mail and catalog sales); provided, however, that in the event that the Retail Location is a Special Purpose Outlet, the COMPANY will not operate or license another to operate an additional Restaurant in the same building as the Special Purpose Outlet.
A "Special Purpose Outlet" is defined as a Gold Star Chili restaurant located inside shopping malls or centers, zoos, airports, race tracks, amusement parks, fairgrounds, sports stadiums, hospitals, factories, bars, schools, gas stations, and special events.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, Gold Star retains the right to sell or distribute products similar to those offered by the restaurant through alternative channels of distribution within the franchisee's protected territory. These alternative channels include grocery and convenience stores, internet sales, direct mail, and catalog sales. This means that while Gold Star grants a protected territory, they can still market and sell similar products through other avenues, potentially impacting a franchisee's sales.
However, there is a stipulation regarding "Special Purpose Outlets." Gold Star will not operate or license another restaurant in the same building as a Special Purpose Outlet. A Special Purpose Outlet is defined as a Gold Star Chili restaurant located inside shopping malls or centers, zoos, airports, race tracks, amusement parks, fairgrounds, sports stadiums, hospitals, factories, bars, schools, gas stations, and special events.
This clause provides some territorial protection for franchisees, but it's important to note that Gold Star can still leverage alternative distribution channels within the protected territory. Prospective franchisees should carefully consider the potential impact of these alternative channels on their business and discuss this with Gold Star during their due diligence.