When is the continuing franchise fee for Gold Star payable?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
ive 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.
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 typically due on or before Tuesday of each week. This payment is based on the Gross Sales from the preceding week, which ends on Sunday. The standard method of payment is through a preauthorized debit arrangement, as detailed in Section 8.3 of the agreement. This means Gold Star will automatically withdraw the fees from the franchisee's designated bank account.
Gold Star requires franchisees to report their weekly sales information. Ideally, Gold Star or a designated third party will directly obtain this sales data from the franchisee's point-of-sale (POS) system. However, if this direct access fails for any reason, Gold Star will notify the franchisee, who must then manually provide the weekly sales report by Thursday. This report must accurately reflect the Gross Sales for the week ending the previous Sunday. The continuing franchise fee is then calculated based on this reported sales figure.
If a Gold Star franchisee fails to submit their Gross Sales report by the Thursday deadline, Gold Star is authorized to debit an amount equal to the average of the continuing franchise fees and Brand Building Fees payable by the franchisee during the immediately preceding three-month period. This ensures that Gold Star receives timely payments even if the franchisee misses the reporting deadline. Franchisees are responsible for ensuring the accuracy of their Gross Sales figures, as these figures directly determine the amount of continuing franchise fees owed.
It is important to note that all amounts payable by the franchisee to Gold Star must be made without any deductions or set-offs. Late payments will incur interest at a rate of 1.5% per month, or the maximum rate permitted by law, whichever is less. Franchisees must also maintain a single bank account for their business operations and ensure that there are sufficient funds in the account to cover the electronic transfer of fees. Any shortfall in funds will be considered a default in payment under the franchise agreement.