In the event of litigation, what specific financial obligations does a Gold Star franchisee have to the company?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 27. EXPENSES. If the COMPANY incurs any costs or expenses (including but not limited to attorneys' fees, court costs, other litigation expenses, settlement expenses or other expenses of any kind) in enforcing or protecting the COMPANY's rights under this Agreement, or any judgments, orders or awards relating thereto, or in preparation for or investigation or contemplation thereof, the COMPANY shall be entitled to recover from FRANCHISEE all such costs and expenses on demand, with interest from the date due pursuant to Section 8.3, above.
AS WITNESS the hands of the duly authorized representatives of the parties hereto as of the date of execution by Gold Star Chili, Inc. set forth below.
- 6.10 Franchisee's Failure to Cooperate.
Section 6.7 notwithstanding, if FRANCHISEE fails to meet its obligations under Sections 6.8 and 6.9 with respect to any particular event, the COMPANY's warranties and obligations under Sections 6.7 and 6.8 shall become void with respect to such particular event, and the COMPANY shall have no liability for costs incurred or damages awarded against FRANCHISEE. EXCEPT AS SPECIFICALLY SET FORTH IN SECTION 6.8, ABOVE, THE COMPANY SHALL NOT BE LIABLE TO FRANCHISEE FOR ANY DAMAGES, COSTS, OR EXPENSES WHATSOEVER, INCLUDING BUT NOT LIMITED TO, ANY LOSS OF PROFITS OR BUSINESS OPPORTUNITIES, OR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND WHATSOEVER RELATING TO ANY ACTION OR OTHER MATTER INVOLVING THE MARKS OR GOODWILL ASSOCIATED THEREWITH.
6.11 Notice to the Public. FRANCHISEE will identify itself to the public as the owner of the Store in at least one conspicuous location in the Store and in any other documentation that the COMPANY may reasonably specify. FRANCHISEE will not use the Marks or the System to incur any obligation or indebtedness on behalf of the COMPANY, or in connection with any activity that may harm, tarnish or impair the COMPANY's reputation, name, service, Marks or System. The COMPANY assumes no liability to FRANCHISEE or any third party with respect to the quality of any materials, supplies, food items, sauces, or services or any other items provided or promoted by the COMPANY and as distributed or provided by FRANCHISEE under the name GOLD STAR CHILI or any other Mark, and FRANCHISEE will indemnify, hold harmless and insure the COMPANY against any liability, loss or expense (including reasonable attorney fees) arising out of FRANCHISEE's use of the Marks or the System.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, franchisees may face financial obligations to the company in the event of litigation. While franchisees are entitled to retain independent legal counsel, Gold Star is not responsible for covering the costs of that counsel.
In cases where a franchisee fails to meet their obligations related to specific events, Gold Star's warranties and obligations become void, meaning Gold Star will not be liable for any costs or damages awarded against the franchisee. Furthermore, Gold Star will not be liable to the franchisee for any damages, costs, or expenses, including loss of profits or business opportunities, relating to any action involving the marks or goodwill associated with Gold Star.
Franchisees are also required to indemnify, hold harmless, and insure Gold Star against any liability, loss, or expense, including reasonable attorney fees, arising from the franchisee's use of the Gold Star marks or system. Additionally, if Gold Star incurs any costs or expenses, such as attorneys' fees and court costs, while enforcing or protecting its rights under the Franchise Agreement, the franchisee is responsible for covering all such costs and expenses, along with interest from the date due.