Does the Gold Star franchise agreement require the franchisee to defend the company against claims?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
Except for: (i) claims against FRANCHISEE concerning the underreporting of Gross Sales and corresponding underpayment of continuing franchise and Brand Building Fees, (ii) claims against FRANCHISEE by The COMPANY relating to third party claims or suits brought against The COMPANY as a result FRANCHISEE's operation of the Store, (iii) claims for injunctive relief to enforce the provisions of this Agreement relating to FRANCHISEE's use of the Marks, (iv) claims against FRANCHISEE by The COMPANY for injunctive relief relating to FRANCHISEE's financial obligations upon the termination or expiration of this Agreement, (v) claims against FRANCHISEE by The COMPANY concerning FRANCHISEE's obligations under Articles 11 or 12 of this Agreement, and (vi) claims against FRANCHISEE by The COMPANY regarding an assignment of this Agreement or any ownership interests therein, any and all claims arising out of or relating to this Agreement or the relationship between the parties will be barred unless an action is commenced within one year from the date FRANCHISEE or The COMPANY knew or should have known of the facts giving rise to such claims.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, franchisees may be required to defend Gold Star against third-party claims or suits brought against Gold Star as a result of the franchisee's store operation.
Specifically, Gold Star can bring claims against the franchisee relating to third-party claims or suits. This means that if a customer or other party sues Gold Star due to something that happened at the franchisee's location, Gold Star can seek to recover costs or damages from the franchisee.
This type of clause is relatively common in franchise agreements, as it aims to protect the franchisor from liabilities arising from the franchisee's business operations. Prospective Gold Star franchisees should carefully consider this obligation and ensure they have adequate insurance coverage to protect themselves against potential claims.