Is Gold Star franchisees entitled to a share of judgments awarded to the company?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 19.2 No Right to Discounts or Profits. Nothing contained in this Agreement shall be construed so as to limit or affect in any way whatsoever any profits, revenues or income the COMPANY or any of its affiliates or associates may earn or charge on sales or services to FRANCHISEE, nor shall it be construed so as to entitle FRANCHISEE to any share or participation in any discount, rebates, commission, fees or other sums that the COMPANY may receive from suppliers, distributors, manufacturers, sales organizations or others supplying goods or services to the COMPANY or FRANCHISEE, or judgments or damages awarded to the COMPANY of any kind whatsoever, and FRANCHISEE expressly acknowledges that the COMPANY may earn or receive such without any obligation therefor to FRANCHISEE.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, franchisees are not entitled to any share of judgments or damages awarded to the company. Section 19.2 of the franchise agreement explicitly states that nothing in the agreement entitles the franchisee to any participation in judgments or damages awarded to Gold Star. The agreement also specifies that Gold Star may receive such judgments or damages without any obligation to the franchisee.
This means that if Gold Star wins a lawsuit and is awarded monetary damages, the franchisee has no right to a portion of that money. This is a standard practice in franchising, as the franchisor typically owns the trademarks, systems, and intellectual property that are the basis for such legal claims. The franchisee's financial interests are generally limited to the profits generated by their individual Gold Star restaurant.
This provision protects Gold Star's financial interests and ensures that it retains control over any legal settlements or awards. For a prospective franchisee, this highlights the importance of focusing on the profitability of their own Gold Star location, rather than relying on potential windfalls from company-level legal victories. Franchisees should be aware that their financial success depends on their own business operations and not on any potential legal settlements the company may receive.