Does the Gold Star franchise agreement specify any limits on the amount that can be debited for late fees?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
8.3.1 FRANCHISEE will pay continuing franchise fees and Brand Building Fees or any other amounts owed to the COMPANY (or its designee) under this Agreement or any other agreement by pre-authorized electronic debit from FRANCHISEE's bank or other financial institution account. On or before Tuesday of each week, the COMPANY or a designated third party supplier will unilaterally obtain FRANCHISEE's weekly sales information directly from FRANCHISEE's POS system for the preceding week ending on Sunday. In the event the COMPANY or its designated third party supplier is unable to directly obtain FRANCHISEE's weekly sales information for whatever reason, the COMPANY will notify FRANCHISEE and FRANCHISEE will provide to the COMPANY no later than Thursday the weekly sales report or such other information as the COMPANY may require, in a form prescribed by the COMPANY and certified by FRANCHISEE or by the designated individual, accurately reflecting FRANCHISEE's Gross Sales for the preceding week ending on Sunday. The amount of continuing franchise fees and Brand Building Fees due thereon will be calculated based on FRANCHISEE's Gross Sales report that has been obtained through the COMPANY's automated process or, alternatively, if the COMPANY or its designated third party supplier was unable to obtain the report from FRANCHISEE's POS system, and FRANCHISEE was thereby required to provide the weekly sales report manually, the amount of continuing franchise fees and Brand Building Fees shall be calculated based on the report submitted by FRANCHISEE. Each Tuesday, the COMPANY will debit FRANCHISEE's account in an amount equal to the continuing franchise fees and Brand Building Fees reported payable by FRANCHISEE and any amounts owed to the COMPANY under this Agreement or any other agreement. If FRANCHISEE fails to timely report its Gross Sales to the COMPANY by Thursday for any weekly reporting period, then the COMPANY will be authorized to debit FRANCHISEE's account in an amount equal to an average of the continuing franchise fees and Brand Building Fees payable by FRANCHISEE during the immediately preceding three-month period (or such shorter period as the Store has been in operation) for which weekly sales reports were received. FRANCHISEE is responsible for ensuring accuracy of the Gross Sales figure that is used for calculation of continuing franchise fees and Brand Building Fees. Nothing in this paragraph is to be construed to waive
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, the franchise agreement does not explicitly state a limit on the amount that can be debited for late fees. However, it does specify conditions under which Gold Star is authorized to debit a franchisee's account.
Specifically, Gold Star franchisees are required to pay continuing franchise fees, Brand Building Fees, and any other amounts owed to Gold Star via pre-authorized electronic debit. If a franchisee fails to report their Gross Sales on time, Gold Star is authorized to debit an amount equal to the average of the continuing franchise fees and Brand Building Fees payable by the franchisee during the preceding three-month period (or a shorter period if the store has been open for less than three months).
Additionally, if amounts payable are not paid when due, they will bear interest from the date due until paid at a rate of 1.5% per month, or the maximum rate permitted by law, whichever is less. Franchisees are also responsible for reimbursing Gold Star for any charges incurred by Gold Star due to insufficient funds in the franchisee's account. While there is no explicit cap on late fee amounts, the agreement outlines the circumstances and calculations for debits related to fees and late payments.