What must a Gold Star franchisee do if rebuilding is prohibited by law after destruction of the retail location?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
However, cessation of the Business shall not constitute default of this Agreement if caused by condemnation, appropriation, expiration of the term of the Lease (except when due to FRANCHISEE's fault or neglect), or when rebuilding following destruction of the buildings at the Retail Location is prohibited by law or the Lease so long as FRANCHISEE is actively seeking a new location pursuant to Section 1.5, above, and is otherwise in compliance with this Agreement;
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, if a Gold Star retail location is destroyed and rebuilding is prohibited by law or the lease agreement, the franchisee will not be in default of their franchise agreement as long as they are actively seeking a new location. This is contingent on the franchisee's adherence to Section 1.5 of the agreement and continued compliance with all other aspects of the agreement.
This clause protects the franchisee from being penalized for circumstances beyond their control, such as legal restrictions preventing reconstruction. However, it also places an obligation on the franchisee to actively pursue a new location to continue operating their Gold Star franchise. The franchisee must demonstrate a proactive approach to securing a new site to maintain good standing with Gold Star.
This requirement to actively seek a new location aligns with the typical expectations in franchising, where franchisees are expected to maintain continuous operation and uphold the brand's presence. By actively seeking a new location, the franchisee demonstrates their commitment to the Gold Star brand and mitigates potential damages to the brand's reputation and market presence. It is important for prospective franchisees to understand this obligation and be prepared to act swiftly and decisively in the event of such an unforeseen circumstance.