What happens if a Gold Star franchisee is late on payments to designated suppliers?

According to Gold Star's 2025 Franchise Disclosure Document, the current payment terms with designated suppliers are either Net 7 or Net 14. However, if a franchisee is late or fails to make payments, the supplier has the right to demand cash on delivery. This means that instead of having a grace period to pay for goods received, the franchisee would need to pay for the goods immediately upon delivery.

This change in payment terms could create cash flow challenges for a Gold Star franchisee. Requiring immediate payment could strain the franchisee's working capital, especially if they are experiencing slow sales or unexpected expenses. It's important for franchisees to maintain good relationships with suppliers and ensure timely payments to avoid this situation.

While the FDD specifies the potential for suppliers to demand cash on delivery, it does not detail any specific late payment penalties imposed by Gold Star itself for failing to pay suppliers on time. However, franchisees should be aware of the general 'Late Payment Charge' outlined elsewhere in the document, which could apply to any overdue payments to Gold Star or its affiliates. This charge consists of interest at the lesser of 1½% per month or the maximum rate permitted by law, plus a $25 fee.