What happens if a Gold Star franchisee fails to maintain the required insurance?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 18.5 Failure to Maintain Insurance. If FRANCHISEE fails to procure or maintain insurance as herein required, the COMPANY may at its option (but shall not be obligated to), in addition to its other rights and remedies hereunder, procure such insurance and, in such event, FRANCHISEE shall, upon demand from time to time, reimburse the COMPANY for the costs and premiums thereof together with interest thereon from the date such costs are incurred by COMPANY at the rate specified in Section 8.3, above.
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 procure or maintain the required insurance, Gold Star has the option, but not the obligation, to procure such insurance themselves. If Gold Star chooses to obtain insurance on behalf of the franchisee, the franchisee must reimburse Gold Star for the costs and premiums of the insurance.
The franchisee will also be responsible for paying interest on these costs from the date they are incurred by Gold Star. The interest rate applied will be the rate specified in Section 8.3 of the franchise agreement.
It is important to note that Gold Star's decision to procure insurance for a non-compliant franchisee does not relieve the franchisee of their own liability or limit their liability under the indemnity provisions of the franchise agreement. This means the franchisee remains responsible for any losses, claims, or expenses, even if Gold Star has stepped in to provide insurance coverage.