Is a Gold Star franchisee subject to competition from other franchisees?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Gold Star has established and plans to continue establishing company-owned outlets and other channels of distribution using the Marks, including company-owned Restaurants and distribution through grocery stores, convenience stores, other food service establishments, establishments or concessions located within other facilities (such as zoos, airports, race tracks, amusement parks, fairgrounds, sports stadiums, special events and the like) and food brokers, and also may expand through or establish other traditional and non-traditional distribution channels, methods and venues.
You do not receive the right to acquire additional Franchises within your Protected Territory, or contiguous territories or anywhere else. You do not receive the right to relocate your Franchise and must obtain Gold Star's prior written consent in order to change your Retail Location.
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. The FDD states that franchisees will not receive an exclusive territory and may encounter competition from other franchisees, outlets owned by Gold Star, or other distribution channels or competitive brands controlled by Gold Star. However, Gold Star will not operate or license another to operate a Gold Star Restaurant in a Protected Territory, subject to their right to establish Special Purpose Outlets. 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.
The size of the Protected Territory depends primarily on the restaurant's location. For Special Purpose Outlets, the Protected Territory is limited to the building or facility. For other restaurants, the boundaries are defined in the Franchise Agreement, considering factors like population density, income levels, and traffic counts. Gold Star retains the right to establish company-owned outlets and other distribution channels using their trademarks, including company-owned restaurants and distribution through grocery stores, convenience stores, other food service establishments, establishments or concessions located within other facilities (such as zoos, airports, race tracks, amusement parks, fairgrounds, sports stadiums, special events and the like) and food brokers, and also may expand through or establish other traditional and non-traditional distribution channels, methods and venues.
This lack of exclusive territory and the potential for competition from various sources is a significant factor for prospective franchisees to consider. While a Protected Territory is defined, it is subject to exceptions like Special Purpose Outlets. Furthermore, Gold Star retains the right to establish company-owned outlets and alternative distribution channels, which could impact a franchisee's business. The franchisee does not receive the right to acquire additional Franchises within their Protected Territory, or contiguous territories or anywhere else. The franchisee does not receive the right to relocate their Franchise and must obtain Gold Star's prior written consent in order to change their Retail Location.