What happens to the fees paid by a Gold Star franchisee if the agreement is terminated?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 14.1 Default by Franchisee. FRANCHISEE acknowledges that each obligation of FRANCHISEE under this Agreement is material and reasonable and that strict, timely and exact performance by FRANCHISEE of each of such obligations herein is a condition precedent to the continuance of this Agreement. Any breach of any obligation or failure to perform such obligation on the part of
FRANCHISEE whether by way of omission or commission shall be deemed to be a substantial breach going to the essence of this Agreement which shall entitle the COMPANY to exercise any and all remedies given in this Agreement, at law or in equity.
26. SURVIVAL OF TERMS AND CONDITIONS. The obligations of FRANCHISEE under Sections 11, 12, 16, and 19.3 hereof, and any other FRANCHISEE obligations herein that are stated to, or are of a type that would reasonably, survive or apply beyond termination or expiration of this Agreement, shall survive any termination or expiration of this Agreement; and expiration or termination of this Agreement shall be without prejudice to the rights of the COMPANY against FRANCHISEE thereunder and with respect to other like matters that reasonably would survive the end of a franchise relationship, and shall not relieve FRANCHISEE of any of FRANCHISEE's obligations to the COMPANY existing at the time of expiration or termination.
27. EXPENSES. If the COMPANY incurs any costs or expenses (including but not limited to attorneys' fees, court costs, other litigation expenses, settlement expenses or other expenses of any kind) in enforcing or protecting the COMPANY's rights under this Agreement, or any judgments, orders or awards relating thereto, or in preparation for or investigation or contemplation thereof, the COMPANY shall be entitled to recover from FRANCHISEE all such costs and expenses on demand, with interest from the date due pursuant to Section 8.3, above.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
The 2025 Gold Star Franchise Disclosure Document (FDD) does not explicitly state whether franchise fees are refundable upon termination of the franchise agreement. However, Item 14.1 indicates that any breach or failure to perform obligations by the franchisee is considered a substantial breach, entitling Gold Star to exercise remedies provided in the agreement, at law, or in equity. This suggests that if the franchisee's actions lead to termination, they may risk losing fees paid.
Item 23 outlines that certain obligations of the franchisee, such as those related to Sections 11, 12, 16, and 19.3, along with any others that reasonably extend beyond the agreement's termination, will remain in effect. This implies that some financial responsibilities could persist even after the agreement ends. Additionally, Gold Star is entitled to recover costs and expenses, including attorney's fees, if they incur expenses enforcing their rights under the agreement.
Prospective franchisees should carefully review the franchise agreement, specifically Sections 11, 12, 16, and 19.3, to understand which obligations survive termination. It is also important to clarify with Gold Star under what specific conditions, if any, a refund of fees might be possible in the event of termination. Understanding these terms is crucial for assessing the financial risks associated with the franchise.