Does the Gold Star franchise agreement create a partnership, employment, or agency relationship between the franchisee and the company?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
19.1 Independent Contractor. Nothing in this Agreement creates a partnership, employment or agency relationship between FRANCHISEE and the COMPANY, or authorizes FRANCHISEE to make any contract, agreement, warranty, or representation on the COMPANY's behalf or to incur any debt or other obligation in the COMPANY's name. The COMPANY will in no event assume liability for, or be deemed liable hereunder as a result of, any such action by FRANCHISEE. The COMPANY will not be liable to any third party for any act or omission of FRANCHISEE in any of its operations hereunder (including, without limitation, any claim or action against FRANCHISEE for negligent hiring, sexual harassment, or employment discrimination) or any claim or judgment arising against FRANCHISEE. FRANCHISEE will indemnify, defend and hold the COMPANY harmless from and against any and all claims, debts, liabilities or obligations arising directly or indirectly from, as a result of or in connection with the operation of the Store (excluding, however, liabilities caused by (i)
FRANCHISEE's proper reliance on or use of procedures or materials provided by the COMPANY, or (ii) the COMPANY's gross negligence), and will pay all costs (including, without limitation, legal and accounting fees) incurred by the COMPANY in defending against and/or responding to them. FRANCHISEE WILL DISPLAY PROMINENTLY AT ITS PLACE OF BUSINESS, ON ALL CORRESPONDENCE WITH THIRD PARTIES, AND IN ANY PRINTED MATERIALS BEARING ITS NAME OR BUSINESS LOCATION, A STATEMENT THAT THE STORE IS INDEPENDENTLY OWNED AND OPERATED 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 franchise agreement explicitly states that no partnership, employment, or agency relationship is created between the franchisee and Gold Star. The franchisee operates as an independent contractor and is not authorized to make any agreements or incur any debt on Gold Star's behalf. This is a common arrangement in franchising, where franchisees are independent business owners who license the brand and system from the franchisor.
This arrangement means that the franchisee is responsible for all aspects of their business's operations, including hiring, training, and managing employees. Gold Star will not be liable for any actions or omissions of the franchisee in their operations, including claims related to negligent hiring, sexual harassment, or employment discrimination. The franchisee is required to indemnify, defend, and hold Gold Star harmless from any claims or liabilities arising from the operation of the store, except for liabilities caused by the franchisee's proper reliance on Gold Star's procedures or materials, or Gold Star's gross negligence.
To further emphasize the independent nature of the franchise, the franchisee is required to prominently display a statement at their place of business, on all correspondence with third parties, and in any printed materials, indicating that the store is independently owned and operated. This requirement helps to avoid any confusion about the relationship between the franchisee and Gold Star and reinforces the franchisee's status as an independent business owner.