What happens if a Gold Star franchisee fails to comply with the company's 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, who will then have a period of time, no less than 30 days, to correct its operations. 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 includes causing the franchisee's premises and equipment to be cleaned and ensuring the franchisee's 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 by Gold Star, Gold Star may 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, in which case the franchisee will pay Gold Star an amount equal to 125% of all expenses Gold Star incurs. These expenses include food and beverage, actual wages, wage-related expenses, travel and lodging expenses, and supplies. Alternatively, Gold Star may charge the franchisee a daily fee of $100 for each day the deficiencies remain uncorrected after the cure period. The franchisee will make payment by preauthorized debit to the franchisee's bank or other financial institution account.
This means that a Gold Star franchisee must adhere to all operational standards set by the company, and failure to do so can result in financial penalties and direct intervention by Gold Star to correct deficiencies at the franchisee's expense. The franchisee bears the risk of increased costs (125% of expenses) if Gold Star steps in to correct operational issues. The daily fee of $100 adds another layer of financial risk for uncorrected issues. Prospective franchisees should carefully review the System Standards and ensure they have the resources and commitment to maintain compliance.