How is the continuing franchise fee for a Gold Star franchise calculated?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
OMPANY, the lesser of the initial franchise fee FRANCHISEE would be required to pay if the Transferred Restaurant were a New Restaurant pursuant to Sections 8.1.1 through 8.1.3 and Twenty Five Thousand Dollars ($25,000).
- 8.1.6 The applicable initial or renewal fees set forth in Sections 8.1.1 through 8.1.5 above shall be paid upon execution of this Agreement, is fully earned by the COMPANY upon execution and delivery of this Agreement and is nonrefundable.
- 8.1.7 A continuing franchise fee, based on Gross Sales, in the amount of the Percentage Franchise Fee set forth on the cover page hereof. All continuing franchise fees are nonrefundable. Unless otherwise required in the Manual, the continuing franchise fee shall be payable by FRANCHISEE to the COMPANY on or before Tuesday of each week based on the Gross Sales for the preceding week ending on Sunday pursuant to the preauthorized debit arrangement described in Section 8.3, below.
- 8.1.8 A continuing brand building fee, based on Gross Sales, in the amount of the Percentage Brand Building Fee set forth on the cover page hereof (the "Brand Building Fee"), subject to increase or decrease by the COMPANY in its sole discretion (but not to exceed, in any calendar year, seven percent (7%) of FRANCHISEE's Gross Sales for such year without the written consent of FRANCHISEE). The Brand Building Fee will not be increased by more than 1% in any 12-month period. All Brand Building Fees are nonrefundable. Unless otherwise required in the Manual or pursuant to Section 8.3 below, the Brand Building Fee shall be payable by FRANCHISEE to the COMPANY (or the COMPANY's designee) for the COMPANY's Brand Building Fund (as defined in Section 9.3)) on or before Tuesday of each week based on the Gross Sales for the preceding week ending on Sunday pursuant to the preauthorized debit arrangement described in Section 8.2, below.
- 8.2 Certain Definitions. For the purposes of Section 8.1 above:
- 8.2.1 "New Restaurant" means a Restaurant that is not a Transferred Restaurant; and
- 8.2.2 "Transferred Restaurant" means a Restaurant that will be operated from a premises upon which a Gold Star Chili Restaurant was operating at any time during the previous six (6) months.
8.3 Electronic Debit Payments.
8.3.1 FRANCHISEE will pay continuing franchise fees and Brand Building Fees or any other amounts owed to the COMPANY (or its designee) under this Agreement or any other agreement by pre-authorized electronic debit from FRANCHISEE's bank or other financial institution account. On or before Tuesday of each week, the COMPANY or a designated third party supplier will unilaterally obtain FRANCHISEE's weekly sales information directly from FRANCHISEE's POS system for the preceding week ending on Sunday. In the event the COMPANY or its designated third party supplier is unable to directly obtain FRANCHISEE's weekly sales information for whatever reason, the COMPANY will notify FRANCHISEE and FRANCHISEE will provide to the COMPANY no later than Thursday the weekly sales report or such other information as the COMPANY may require, in a form prescribed by the COMPANY and certified by FRANCHISEE or by the designated individual, accurately reflecting FRANCHISEE's Gross Sales for the preceding week ending on Sunday. The amount of continuing franchise fees and Brand Building Fees due thereon will be calculated based on FRANCHISEE's Gross Sales report that has been obtained through the COMPANY's automated process or, alternatively, if the COMPANY or its designated third party supplier was unable to obtain the report from FRANCHISEE's POS system, and FRANCHISEE was thereby required to provide the weekly sales report manually, the amount of continuing franchise fees and Brand Building Fees shall be calculated based on the report submitted by FRANCHISEE. Each Tuesday, the COMPANY will debit FRANCHISEE's account in an amount equal to the continuing franchise fees and Brand Building Fees reported payable by FRANCHISEE and any amounts owed to the COMPANY under this Agreement or any other agreement.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, the continuing franchise fee is based on a percentage of Gross Sales, with the specific percentage outlined on the cover page of the Franchise Agreement. This fee is nonrefundable. Unless specified otherwise in the Manual, franchisees must pay the continuing franchise fee to Gold Star every Tuesday. The payment is based on the Gross Sales from the preceding week, which ends on Sunday. Payments are made through a preauthorized debit arrangement.
In addition to the continuing franchise fee, Gold Star franchisees also pay a continuing brand building fee, which is also a percentage of Gross Sales and is subject to change by Gold Star. However, the brand building fee cannot increase by more than 1% within a 12-month period, and it cannot exceed 7% of the franchisee's Gross Sales in any calendar year without the franchisee's written consent. This fee is also nonrefundable and is typically paid on or before Tuesday of each week, based on the previous week's Gross Sales, via a preauthorized debit arrangement.
Gold Star or a designated third-party supplier will obtain the franchisee's weekly sales information directly from the franchisee's POS system. If this is not possible, the franchisee must provide the weekly sales report to Gold Star by Thursday. The continuing franchise fees and brand building fees are calculated based on this Gross Sales report. If a franchisee fails to report Gross Sales by the specified deadline, Gold Star is authorized to debit an amount equal to the average of the continuing franchise fees and Brand Building Fees payable by FRANCHISEE during the immediately preceding three-month period (or such shorter period as the Store has been in operation) for which weekly sales reports were received. It is the franchisee's responsibility to ensure the accuracy of the Gross Sales figure used for these calculations.