What is the Gold Star franchisee's responsibility regarding notice to Gold Star of legal actions?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 6.8 Notice of Infringement.
FRANCHISEE agrees to advise the COMPANY promptly in writing of any potentially infringing uses of the Marks, or colorable imitations or variations thereof, by others, and of any suits brought, or claims or demands made or threatened against FRANCHISEE involving the Marks.
In the event a third party commences a legal action against FRANCHISEE challenging FRANCHISEE's right to use the Marks as authorized herein, the COMPANY (a) may, in its sole discretion, assume the defense of FRANCHISEE, utilizing counsel of the COMPANY's choice, against such legal action, and (b) shall indemnify FRANCHISEE against all damages for infringement for which FRANCHISEE is held liable in such action resulting from FRANCHISEE's authorized use of the Marks pursuant to and in compliance with the Agreement, provided that:
6.8.1 FRANCHISEE provides the COMPANY with timely notice of the institution of the action;
6.8.2 FRANCHISEE cooperates fully with the COMPANY's counsel in defending against the action; and
6.8.3 The COMPANY retains ultimate control over the strategy involved in defending against and/or resolving the action.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, franchisees must promptly advise Gold Star in writing of any potential infringement of the Gold Star marks. This includes any similar imitations or variations by others. Franchisees must also report any lawsuits, claims, or demands made or threatened against them that involve the Gold Star marks.
If a third party initiates legal action against a Gold Star franchisee, challenging their right to use the Gold Star marks, Gold Star has the option to assume the defense. If Gold Star chooses to defend the franchisee, they can select their own legal counsel. In this case, Gold Star will cover any infringement damages the franchisee is liable for, provided the franchisee's use of the marks was authorized and compliant with the franchise agreement.
To receive this support, the Gold Star franchisee must provide timely notice of the legal action, fully cooperate with Gold Star's counsel in defending the action, and allow Gold Star to retain ultimate control over the defense strategy and resolution. This means that while franchisees may be involved in the legal process, Gold Star has the final say in how the case is handled.
These stipulations are important for prospective franchisees to understand, as failing to meet these obligations could result in Gold Star revoking their warranties and obligations to defend the franchisee, leaving the franchisee responsible for all costs and damages. Franchisees should ensure they have a clear process for identifying and reporting any potential infringements or legal actions to Gold Star to maintain their protection under the franchise agreement.