Is a Gold Star franchisee subject to competition from other distribution channels or competitive brands that Gold Star controls?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
There is no guarantee that future programs will be similar to past programs.
Item 12
Territory
You will not receive exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
Your Franchise is limited to the operation of 1 Gold Star Restaurant at a specific Retail Location, which must be approved by Gold Star. We agree not to operate or license another to operate a Gold Star Restaurant in a territory we designate in your Franchise Agreement (your "Protected Territory"), subject to our right to establish certain "Special Purpose Outlets" in the Protected Territory and to sell or distribute Gold Star products using the Marks through alternate distribution channels in the Protected Territory. A "Special Purpose Outlet" is a Gold Star Restaurant located inside a shopping mall or center, zoo, airport, race track, amusement park, fairgrounds, sports stadium, hospital, factory, bar, school, gas station, and special event. You are not granted (nor should you infer) any exclusive, protected, or territorial rights of any kind whatsoever outside of the Protected Territory, including any contiguous market area.
The size of your Protected Territory depends primarily upon the location of your Restaurant. The Protected Territory for a Special Purpose Outlet will be the relevant building or facility. The Protected Territory boundaries for other Restaurants are those set forth in Franchisees' Franchise Agreements. In determining Protected Territory boundaries, Gold Star evaluates a number of factors, including density of the population, earnings of the populace, and traffic counts.
Source: Item 12 — Territory (FDD pages 36–37)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, a franchisee may face competition from various sources. Gold Star does not grant exclusive territories, meaning franchisees could encounter competition from other franchisees, outlets that Gold Star owns, or alternative distribution channels and competitive brands that Gold Star controls. This lack of territorial exclusivity is a significant factor for prospective franchisees to consider.
Gold Star retains the right to establish "Special Purpose Outlets" within a franchisee's protected territory. These outlets, located in venues like shopping malls, airports, and sports stadiums, can directly compete with a franchisee's primary location. Additionally, Gold Star can sell or distribute its products through alternate channels, further intensifying potential competition within the protected territory.
Gold Star also has the ability to establish company-owned outlets and other distribution channels using their marks, including distribution through grocery stores, convenience stores, and other food service establishments. This broad distribution strategy underscores the importance of a franchisee's ability to effectively compete within their local market, as Gold Star actively pursues multiple avenues for product distribution. Prospective franchisees should carefully evaluate the competitive landscape and market conditions before investing in a Gold Star franchise.