Is a Gold Star franchisee prohibited from inducing COMPANY employees to leave their employment?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
During the term of this Agreement and all extensions or renewals thereof and for three (3) years thereafter, FRANCHISEE shall not, directly or indirectly: (a) divert or attempt to divert any of the COMPANY's business or any of the COMPANY's customers to any Similar Business; (b) induce COMPANY employees to leave their employment with the COMPANY; or (c) do or perform any other act injurious or prejudicial to the COMPANY's goodwill associated with its Marks and System.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, a franchisee is indeed restricted from inducing Gold Star employees to leave their employment. During the term of the Franchise Agreement, including any extensions or renewals, and for a period of three years after the agreement's termination, the franchisee is prohibited from directly or indirectly inducing Gold Star employees to leave their employment with the company. This restriction is in place to protect Gold Star's business and its relationships with its employees.
This provision prevents franchisees from actively recruiting or encouraging current Gold Star employees to leave their positions and potentially work for the franchisee's own business or another venture. This type of clause is common in franchise agreements to safeguard the franchisor's workforce and maintain stability within the franchise system. It ensures that franchisees cannot unfairly benefit from the franchisor's investment in training and developing its employees.
For a prospective Gold Star franchisee, this means they must be careful not to solicit or encourage Gold Star employees to leave their current jobs. Doing so would be a breach of the Franchise Agreement and could lead to legal repercussions. Franchisees should ensure their management teams and employees are aware of this restriction to avoid any unintentional violations. This clause aims to protect Gold Star's interests by preventing franchisees from poaching employees and potentially disrupting the company's operations.