Is a Gold Star franchisee required to buy or lease from Gold Star or Gold Star's designees?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
on a Franchisee's use of designated or approved sources.
Approximately 90% to 95% of your total purchases associated with establishing your Restaurant and approximately 90% to 95% of your total purchases associated with the ongoing operation of your Restaurant must either be purchased or leased from Gold Star or Gold Star approved suppliers, or must otherwise conform to Gold Star specifications. For the fiscal year ended December 31, 2024, Gold Star's revenues from the sale of these products to Franchisees or to suppliers who in-turn sell these products to Franchisees were $4,065,676 or approximately 16.7% of Gold Star's total revenues of $24,400,821.
Item 9
FRANCHISEE'S OBLIGATIONS
This table lists your principal obligations under the Franchise Agreement and other agreements. It will help you find more detailed information about your obligations in these agreements and in other items of this Disclosure Document.
| Obligation | Section in Agreement | Disclosure Document Item |
|---|---|---|
| a. Site selection and | Sections 1, 4 and 5 of Franchise Agreement | Items 5, 7, 11 and |
| acquisition/lease | 17 | |
| b. Pre-opening purchases/leases | Sections 4, 5, 7 and 18 of Franchise Agreement | Items 5 and 8 |
| c. Site development and other | Sections 2, 4 and 5 of Franchise Agreement | Items 5, 6, 7 and |
| pre-opening requirements | 11 | |
| d. |
Source: Item 8 — Restrictions on Sources of Products and Services (FDD pages 21–25)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, franchisees are, in many instances, required to purchase goods and services from designated or approved suppliers. Approximately 90% to 95% of the total purchases associated with establishing and operating a Gold Star restaurant must be purchased or leased from Gold Star or Gold Star-approved suppliers, or conform to Gold Star's specifications.
Gold Star designates specific suppliers for items such as chili products, food products, branded food products, paper products, cleaning supplies, soda/beverages, bakery items, uniforms, signage and logo items, credit card services, equipment, furniture, architectural services, real estate brokerage services, civil engineering services, menus, marketing services, and guest feedback systems. This requirement ensures uniformity and consistency across all Gold Star franchise locations. Franchisees must also use a real estate broker, architect, general contractor, civil engineer (if applicable), and attorney acceptable to Gold Star for the purchase or leasing of the retail location and the construction of the franchised restaurant.
While franchisees are generally required to use approved suppliers, there is a process for requesting approval of alternative suppliers. Franchisees can submit a written request to Gold Star for approval to purchase from a source not currently on the approved supplier list. Gold Star may inspect the source's facilities, require samples for testing and evaluation, and charge the franchisee for the cost of the inspection and evaluation. Gold Star will then notify the franchisee of its decision within 60 days. However, Gold Star does not disclose its criteria for supplier approval to franchisees and reserves the right to revoke approval of any source or item that no longer meets its standards.
For the fiscal year ended December 31, 2024, Gold Star's revenues from the sale of these products to franchisees or to suppliers who in turn sell these products to franchisees were $4,065,676, which is approximately 16.7% of Gold Star's total revenues of $24,400,821. Except for certain branded items and the point-of-sale (POS) system, Gold Star does not derive revenue from franchisee purchases or leases of items or services related to the franchise. Franchisees are required to assign product and advertising rebates or allowances received from certain suppliers (currently the soft drink supplier) to Gold Star, which are then directed to the GSCAA for deposit into the Brand Building Fund.