What event caused the Hartwell Gold Star franchise to cease operations?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
Ohio 45216 (the "Property").
On October 9, 2021, there was a fire at the Property that resulted in a total loss of the Hartwell Gold Star. After the fire, the defendants ceased operating, never rebuilt, and retained insurance proceeds which were to be used to rebuild, the Hartwell Gold Star. Defendant 21 Partners was issued a check for $157,990.41 for replacement of furniture, fixtures, and equipment, but never provided Gold Star with these proceeds, despite having a contractual obligation to do so. Defendant 21 Partners provided Gold Star with building replacement insurance proceeds totaling $455,642.92, but the total cost for restoration is $1,106,670.00, a cost for whi
Source: Item 3 — Litigation (FDD pages 10–11)
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, the Hartwell Gold Star franchise ceased operations due to a fire at the property on October 9, 2021, which resulted in a total loss of the restaurant. Following the fire, the franchisee, 21 Partners Group LLC, did not rebuild the location. Instead, they retained insurance proceeds that were intended for the reconstruction of the Hartwell Gold Star. Specifically, 21 Partners Group LLC received $157,990.41 for the replacement of furniture, fixtures, and equipment but did not provide these funds to Gold Star, despite a contractual obligation to do so. They also received $455,642.92 in building replacement insurance proceeds, while the total cost for restoration was estimated to be $1,106,670.00.
Because the franchisee failed to rebuild the Hartwell Gold Star location after receiving insurance funds earmarked for that purpose, Gold Star initiated a lawsuit against 21 Partners Group LLC and its owner, Rasem Daoud, on June 14, 2024. The lawsuit aims to resolve the issues related to the retained insurance proceeds and the failure to restore the restaurant. As of the FDD's publication, the lawsuit was in the discovery phase.
This situation highlights the importance of franchisees fulfilling their contractual obligations, particularly regarding the use of insurance proceeds for rebuilding after a loss. It also demonstrates the potential legal recourse available to Gold Star in cases where franchisees fail to meet these obligations. Prospective franchisees should carefully review the Franchise Agreement to understand their responsibilities related to insurance, rebuilding, and the handling of related funds.