Are Gold Star franchisees required to purchase proprietary chili from the company?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
Additionally, all franchise agreements require franchisees to purchase proprietary chili from the Company.
7. PURCHASE OF INGREDIENTS, SUPPLIES AND MATERIALS.
- 7.1 Proprietary Products. In order to establish uniformity of taste and quality of the COMPANY's chili products, the COMPANY has developed and will continue to develop secret blends of spices and flavorings, its own secret chili Product and related items as designated by the COMPANY in the Manual or otherwise in writing from time to time (collectively, the "Proprietary Products"), which must be purchased by Restaurant franchisees only from the COMPANY or suppliers specifically appointed by the COMPANY for use by Restaurant franchisees. FRANCHISEE agrees to purchase from the COMPANY or its designees all of the Store's requirements for Proprietary Products, as shall be specified from time to time in the Manual or otherwise in writing by the COMPANY, at the COMPANY's or such designee's prices in effect from time to time, and on such shipping, payment, delivery, warranty and other terms as the COMPANY (or its designees, as applicable) may determine in its sole discretion from time to time, and to pay for all such Proprietary Products purchased in accordance with such terms and conditions.
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 purchase proprietary chili from the company. Specifically, Gold Star has developed secret blends of spices and flavorings, its own secret chili Product and related items, which are designated in the Manual or in writing as "Proprietary Products".
To maintain uniformity of taste and quality, franchisees must purchase these Proprietary Products exclusively from Gold Star or from suppliers specifically appointed by Gold Star. This requirement ensures that all Gold Star restaurants serve chili products with a consistent and recognizable flavor profile.
The franchisee is obligated to buy all required Proprietary Products from Gold Star or its designees at the prices and terms (including shipping, payment, delivery, and warranty) that Gold Star or its designees determine. This condition allows Gold Star to control the quality and consistency of its key products while also potentially generating revenue through the sale of these proprietary items.