What is the Gold Star franchisee required to do with the System Standards as they are periodically modified?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
5.1 System Standards. FRANCHISEE acknowledges and agrees that every detail of the System is important, not only to FRANCHISEE but also to the COMPANY and other Gold Star Chili franchisees, in order to develop and maintain uniform operating standards, increase the demand for the products and services offered by all franchisees, establish and maintain a reputation for the highest degree of quality, service, cleanliness and customer satisfaction, and to protect the goodwill of all Gold Star Chili franchises. FRANCHISEE further acknowledges and agrees that a fundamental requirement of the System, this Agreement, and other Gold Star Chili franchises is adherence by all franchisees to the uniform specifications, standards, operating procedures and rules prescribed by the COMPANY for the development and operation of the Store, including, without limitation, standards and specifications regarding ingredients, methods of food preparation and service, and weight, quality and dimensions of menu items and other products served in the Store (collectively referred to as "System Standards"). Accordingly, FRANCHISEE will conduct and operate the Business at all times in a manner that will preserve and build the goodwill of all Restaurants and of the COMPANY, will comply with each and every System Standard, as periodically modified and supplemented by the COMPANY in its sole and absolute discretion, and will not deviate from the System Standards during the term of this Agreement. System Standards prescribed from time to time in the Manual or otherwise communicated to FRANCHISEE in writing will constitute provisions of this Agreement as if fully set forth in this Agreement. All references to this Agreement include all System Standards as periodically modified.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, franchisees must adhere to the System Standards, which the company may modify and supplement periodically at its discretion. Franchisees are required to operate their businesses in compliance with these standards and cannot deviate from them during the term of the agreement. These System Standards, whether found in the manual or communicated in writing, are considered part of the franchise agreement. Therefore, all references to the agreement include any periodic modifications to the System Standards.
This means that a Gold Star franchisee must stay informed about any changes to the System Standards and implement them in their restaurant operations. These standards cover various aspects of the business, including ingredients, food preparation methods, service standards, and the quality and dimensions of menu items. The franchisee's compliance with these standards is crucial for maintaining uniformity across all Gold Star Chili franchises and upholding the brand's reputation.
Failure to comply with the System Standards can result in the franchisor taking corrective action, as detailed in Section 5.14. Gold Star may notify the franchisee of any deficiencies and provide a period (typically at least 30 days) to correct them. However, Gold Star can take immediate action if it believes it is necessary to protect the goodwill of the system or public health and safety. This could include cleaning the premises and ensuring personnel comply with company procedures. If the franchisee fails to correct the issues, Gold Star may take corrective action themselves, charging the franchisee 125% of all expenses incurred or a daily fee of $100 for each day the deficiencies remain uncorrected.