What is the current purchase arrangement between Gold Star and its soft drink supplier?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
ed during 2024 were allocated to the Brand Building Fund.
Under the current and proposed purchase arrangement with our soft drink supplier, purchases by Gold Star and its Franchisees are consolidated for purposes of determining whether Gold Star and its Franchisees are eligible for the supplier pricing offered generally to national account customers. Gold Star and its Franchisees currently are classified as national account customers through December 31, 2024. The soft drink supplier pays Gold Star and its franchisees rebates based on the consolidated volume of purchased products per year. Gold Star currently requires any such rebates payable to franchisees to be assigned to Gold Star (See Item 6, Note 5).
Except for the certain branded items described above (for which Gold Star is an approved supplier), the POS System, and as described in the previous paragraph, neither Gold Star nor any affiliate of Gold Star is an approved supplier or the only approved supplier for, or will or may derive revenue or other material consideration as a result of, purchases or leases of, any items or services that are related to or used in the Franchise and that must be purchased or leased in accordance with Gold Star's standards and specifications, from suppliers approved by Gold Star or otherwise approved by Gold Star. Franchisees, however, are required to assign to Gold Star or its designee all product and/or advertising rebates or allowances received from certain suppliers related to the Franchise (currently assignments are required for our soft drink supplier only). It is Gold Star's current practice to have these assigned payments made to GSCAA for deposit to and use in the Brand Building Fund. Gold Star receives product and/or advertising rebates or allowances from the same suppliers. The terms are the same for Gold Star and the Franchisees.
Source: Item 8 — Restrictions on Sources of Products and Services (FDD pages 21–25)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, Gold Star and its franchisees are considered national account customers with their soft drink supplier through December 31, 2024. This arrangement allows for consolidated purchases to determine eligibility for national account customer pricing. The soft drink supplier provides rebates to Gold Star and its franchisees based on the total volume of products purchased annually.
However, Gold Star requires franchisees to assign any rebates payable to them to Gold Star. It is Gold Star's current practice to have these assigned payments made to GSCAA for deposit to and use in the Brand Building Fund. During the year ended December 31, 2024, GSCAA received approximately $613,262 pursuant to these supplier rebates and advertising allowances for Gold Star and its franchisees.
This arrangement benefits Gold Star by centralizing the rebates and using them for the Brand Building Fund, which supports marketing and brand development. While franchisees do not directly receive the rebates, they may benefit from the enhanced marketing efforts funded by these rebates. A prospective franchisee should inquire whether this arrangement is still in place, and if so, how the Brand Building Fund is used and how it benefits franchisees.
It is important to note that Gold Star can modify its approved supplier lists and standards, and franchisees must adhere to these changes. Franchisees are also required to purchase soda/beverages from approved suppliers. This ensures uniformity and consistency across all Gold Star locations, but it also limits the franchisee's autonomy in choosing suppliers and potentially negotiating better deals independently.