Where can I find the interest rate that applies if Gold Star procures insurance for the franchisee?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 18.5 Failure to Maintain Insurance. If FRANCHISEE fails to procure or maintain insurance as herein required, the COMPANY may at its option (but shall not be obligated to), in addition to its other rights and remedies hereunder, procure such insurance and, in such event, FRANCHISEE shall, upon demand from time to time, reimburse the COMPANY for the costs and premiums thereof together with interest thereon from the date such costs are incurred by COMPANY at the rate specified in Section 8.3, above.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, if a franchisee fails to maintain the required insurance, Gold Star has the option to procure the insurance themselves. If Gold Star exercises this option, the franchisee is obligated to reimburse Gold Star for the costs and premiums of the insurance. This reimbursement will also include interest calculated from the date the costs were incurred by Gold Star. The interest rate applied will be the rate specified in Section 8.3 of the franchise agreement.
It is important for prospective Gold Star franchisees to understand the implications of failing to maintain the required insurance. If Gold Star has to step in and procure insurance, the franchisee will not only have to cover the costs and premiums but also pay interest on those amounts. This could potentially create a financial burden for the franchisee.
Franchisees should carefully review Section 8.3 of the franchise agreement to fully understand how the interest rate is determined. Understanding this section will allow franchisees to be aware of the potential costs associated with failing to maintain adequate insurance coverage and allow them to budget accordingly.