Is a Gold Star franchisee required to participate in the Brand Building Fund?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 9.3 Brand Building Fund. FRANCHISEE shall participate in the COMPANY's marketing fund (the "Brand Building Fund") as the COMPANY shall direct. Subject to written instructions from the COMPANY, FRANCHISEE shall pay all or a portion of the Brand Building Fee directly to the Brand Building Fund. The Brand Building Fund is currently administered by the Gold Star Chili Advertising Association, an Ohio nonprofit corporation, of which the COMPANY is the only member.
- 9.3.1 The COMPANY, or its designee, shall oversee all Brand Building Fund advertising, with sole discretion to determine, approve or disapprove the creative concepts, materials and media used in such advertising, and the placement, type, scope and allocation of the Brand Building Fund advertising. FRANCHISEE agrees and acknowledges that the Brand Building Fund advertising is intended to maximize general public recognition and acceptance of the Marks, Proprietary Products and System and that the COMPANY and its designee undertake no obligation, in
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, franchisees are required to participate in the Brand Building Fund. Specifically, the FDD states that franchisees "shall participate in the COMPANY's marketing fund (the 'Brand Building Fund') as the COMPANY shall direct." This means that participation is not optional but a mandatory part of the franchise agreement. The Brand Building Fund is used for marketing and advertising activities to promote the Gold Star brand.
Franchisees are obligated to pay a Brand Building Fee, which is a percentage of their Gross Sales. The amount of this fee is subject to change by Gold Star, but it cannot exceed 7% of the franchisee's Gross Sales in any calendar year without the franchisee's written consent. Furthermore, increases to the Brand Building Fee are capped at 1% within any 12-month period. These fees are typically paid weekly via preauthorized debit.
The Brand Building Fund is managed by Gold Star, or its designee, who has the sole discretion to determine and approve the advertising strategies and materials. The funds are to be used exclusively for advertising, promotional, and public relations activities at the local, regional, or national level. While the fund is intended to be perpetual, Gold Star reserves the right to terminate or suspend it, ensuring that all monies are expended before termination.
If the Brand Building Fund is suspended or terminated, or if the required Brand Building Fee percentage is less than 7%, Gold Star has the option to increase the Local Marketing Expenditure up to 7% of the franchisee's Gross Sales. However, the combined total of the Local Marketing Expenditure and any required Brand Building Fees cannot exceed 7% of the franchisee's Gross Sales in any calendar year. This ensures that franchisees continue to invest in marketing, even if the structure of the Brand Building Fund changes.