What happens if a Gold Star Chili franchisee fails to comply with the System Standards?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
egistrations, or licenses necessary for the construction, refurbishing and full and proper operation of the Store. FRANCHISEE agrees and acknowledges that FRANCHISEE alone will be responsible for compliance with the obligations under this Section, and that the COMPANY has no obligation with respect thereto.
- 5.14 Correction of Deficiencies. If FRANCHISEE fails to conform its operations to the System Standards, the COMPANY shall notify FRANCHISEE, and FRANCHISEE will have a period of time to be determined by the COMPANY (not less than 30 days) to correct its operations, except that the COMPANY may take immediate action if the COMPANY believes it necessary for the goodwill of the System or to protect public health and safety, including, without limitation, causing FRANCHISEE's premises and equipment to be cleaned and causing FRANCHISEE's personnel to comply with the COMPANY procedures and policies. If FRANCHISEE fails to fully correct its operations or to renovate or modernize the Franchised Restaurant as required by the COMPANY, the COMPANY may, but will not be obligated to, take such corrective action as is, in the determination of the COMPANY, necessary and appropriate to conform FRANCHISEE's operations to the System Standards. Such corrective action shall include, without limitation: 1) entering the Store and performing construction or other corrections thereon, whereupon FRANCHISEE will pay to the COMPANY an amount equal to 125% of all expenses the COMPANY incurs, including, without limitation, food and beverage expenses, the
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, if a franchisee fails to conform its operations to the System Standards, Gold Star will notify the franchisee, granting a period (no less than 30 days) to correct the deficiencies. However, Gold Star can take immediate action if it believes it necessary for the goodwill of the System or to protect public health and safety. This immediate action may include cleaning the premises and equipment or ensuring personnel comply with company procedures and policies.
If the franchisee fails to fully correct its operations or to renovate or modernize the Franchised Restaurant as required, Gold Star has the option to take corrective action to conform the franchisee's operations to the System Standards. This corrective action can include entering the store and performing construction or other corrections, for which the franchisee will pay Gold Star an amount equal to 125% of all expenses incurred, including food and beverage, wages, travel, lodging, supplies, and other expenses. Alternatively, Gold Star can charge the franchisee a daily fee of $100 for each day the deficiencies remain uncorrected after the cure period.
The franchisee is required to make payments via preauthorized debit to their bank or financial institution account. This ensures that Gold Star can promptly address any non-compliance issues to maintain the brand's standards and protect its reputation, while also placing the financial burden of correction on the non-compliant franchisee.