Does the Gold Star franchisee acquire any rights to the System or Confidential Material?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
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constitute a defense to the enforcement by the COMPANY of the foregoing covenants.
12. CONFIDENTIALITY.
- 12.1 Confidential Material. Information contained in the Manual, and other information about the Proprietary Products, the System and the Business, including customer and supplier lists (the "Confidential Material") are proprietary, highly-confidential trade secrets and FRANCHISEE shall not use any such Confidential Material except as necessary in the operation of the Business in accordance with this Agreement. FRANCHISEE further acknowledges and agrees that the COMPANY is the owner of all rights in and to the System, and the Confidential Material, and that the System and the Confidential Material constitute trade secrets of the COMPANY which are revealed to FRANCHISEE in confidence, and that no right is given to or acquired by FRANCHISEE to, and FRANCHISEE shall not, disclose, duplicate, license, sell or reveal any of such Confidential Material to any person, other than disclosure to an employee of FRANCHISEE to the extent required by his/her work in accordance with this Agreement to be familiar with relevant Confidential Material. FRANCHISEE agrees to keep confidential such Confidential Material, and, upon the COMPANY's request, to obtain from each of the Related Parties an agreement to keep the Confidential Materials confidential and not to use the Confidential Materials except as necessary in the operation of the Business. FRANCHISEE will advise the COMPANY promptly in writing if FRANCHISEE learns of any claims made relating to or unauthorized use of any Confidential Material whether by a Related Party or a third party.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, franchisees do not acquire rights to the System or Confidential Material. Gold Star retains ownership of all rights to the System and Confidential Material, which are considered trade secrets. The franchisee is only permitted to use the Confidential Material as necessary for operating the business according to the Franchise Agreement.
This means a Gold Star franchisee cannot disclose, duplicate, license, sell, or reveal any Confidential Material to anyone, except to their employees who need the information to perform their work. Franchisees must also keep the Confidential Material secure and, if requested by Gold Star, ensure that related parties (such as employees) agree to keep the materials confidential as well.
Furthermore, the franchisee agrees not to contest Gold Star's rights to the copyrights, Confidential Material, or the System. This includes refraining from challenging Gold Star's ability to register, use, or franchise others to use these elements, both during and after the term of the Franchise Agreement. This underscores that the franchisee's rights are strictly limited to the use granted by the agreement and do not extend to ownership or the ability to transfer or exploit the System or Confidential Material independently.