What is the geographic scope of the Gold Star franchisee's right to use the Marks and System?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
signated by the COMPANY in writing for use by FRANCHISEE in connection with the System and operation of a Restaurant, and as modified by any and all changes, deletions and additions made by the COMPANY from time to time, are referred to collectively as the "Marks"); and
WHEREAS, FRANCHISEE desires to obtain the benefits of the use and sale of the COMPANY's chili products and the System established by the COMPANY and to obtain the benefit of the knowledge, advice and goodwill of the COMPANY in the operation of a Restaurant and the right to purchase and sell the COMPANY's chili and related products, and therefore FRANCHISEE has applied to the COMPANY for a franchise to operate one (1) Restaurant based upon the terms and conditions hereinafter set forth, exclusively at the Retail Location set forth on the cover page thereof (the "Retail Location"), and for the right to use, solely in connection therewith the System and Marks.
NOW, THEREFORE, in consideration of the above premises and the mutual covenants herein contained, the parties agree as follows:
1. GRANT OF FRANCHISE.
1.1 Grant. COMPANY hereby grants unto FRANCHISEE, and FRANCHISEE hereby accepts, upon the terms and conditions of this Agreement, a license and franchise to establish and operate a Restaurant at the Retail Location (sometimes
herein referred to as the "Restaurant" or the "Store" and the business conducted pursuant to this Agreement is sometimes herein referred to as the "Business"), and to use the Marks and System solely in connection therewith, solely at the Retail Location and in advertising therefor, without any right to sublicense, and in compliance with the provisions of this Agreement.
- 1.2 Term. The term of this Agreement and the franchise granted herein shall be for a term of ten (10) years, or, if less, the term of the lease for the Retail Location (the term is set forth on the cover page of this Agreement) or until otherwise terminated as hereinafter provided; provided FRANCHISEE has secured, and continues to secure, by ownership or lease, the Retail Location for the same term.
- 1.3 Protected Territory. Except for the protections provided in this Section 1.3, the franchise and other rights granted herein are non-exclusive.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, a franchisee's right to use the Gold Star Marks and System is primarily limited to the specific Retail Location outlined in the franchise agreement. Gold Star grants the franchisee a license to operate a restaurant at this Retail Location and to use the Marks and System solely in connection with that location and its advertising. This right is non-exclusive, except for any protections provided within a defined Protected Territory.
Outside the Protected Territory, Gold Star's rights are unrestricted, meaning the company can operate or license others to operate restaurants and solicit customers without limitations. The franchisee's rights to the Retail Location do not extend beyond that location. The agreement specifies that no exclusive, protected, or other territorial rights of any kind are granted or inferred outside of the Protected Territory, including any contiguous market area.
Gold Star may also establish or license Special Purpose Outlets within the Protected Territory, such as those in shopping malls, airports, or sports stadiums, and sell products through alternative channels like grocery stores or online. However, if the Retail Location is a Special Purpose Outlet, Gold Star will not operate or license another restaurant in the same building. This ensures that while the franchisee has rights within their specific location and potentially a Protected Territory, Gold Star retains the flexibility to expand its brand through various channels and locations, even within that territory, subject to certain restrictions.