Does the Franchise Agreement obligate Gold Star to have all of the rebate or allowance payments from suppliers receivable by Gold Star for company-owned Restaurants made to GSCAA?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
Note 5: You must assign to Gold Star or its designee all product and/or advertising rebates or allowances that are granted to you by certain suppliers, as directed by Gold Star. Currently assignments are required with respect to our soft drinks supplier, with whom Gold Star has negotiated a group purchase arrangement. Although not obligated to do so by the Franchise Agreement or any related agreement, Gold Star's current practice is to have the assigned Franchisee supplier payments made (and to have all of the rebate or allowance payments from those suppliers receivable by Gold Star for company-owned Restaurants made) to GSCAA for use in the Brand Building Fund. Gold Star reserves the right to change this practice at any time without notice to its franchisees.
Source: Item 6 — OTHER FEES (FDD pages 12–18)
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, the Franchise Agreement does not obligate Gold Star to have all rebate or allowance payments from suppliers for company-owned restaurants made to GSCAA (Gold Star Chili Advertising Association). However, Gold Star's current practice is to have these payments, along with assigned franchisee supplier payments, made to GSCAA for use in the Brand Building Fund.
This practice is not a requirement stipulated in the Franchise Agreement or any related agreement, meaning Gold Star retains the right to alter this arrangement at any time without prior notification to its franchisees. This discretion allows Gold Star to change how these funds are managed and allocated, which could impact the resources available for brand building and marketing initiatives.
For a prospective franchisee, this means that while there is a current practice of supplier rebates and allowances being directed to the Brand Building Fund via GSCAA, this is subject to change. It is important for potential franchisees to understand that Gold Star has the authority to modify this practice, which could affect the financial support and resources available for marketing and advertising efforts. Therefore, it would be prudent to discuss this aspect with Gold Star during the due diligence process to gain a clearer understanding of the potential implications and future direction of these funds.