What happens if a Gold Star franchisee maintains an insufficient account balance for electronic transfers?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 8.3.3 FRANCHISEE will maintain an account balance sufficient to make all continuing franchise fees, Brand Building Fees, and other payments to the COMPANY by electronic transfer, and any insufficiency will be considered a default in payment pursuant to Section 14.5.1 of this Agreement.
FRANCHISEE will promptly reimburse the COMPANY for any charges incurred by the COMPANY due to a shortage of funds in FRANCHISEE's account.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, franchisees are required to maintain a sufficient account balance to cover all electronic payments to Gold Star. These payments include continuing franchise fees, Brand Building Fees, and any other amounts owed to the company. If a franchisee fails to maintain a sufficient balance for these electronic transfers, it will be considered a default in payment under Section 14.5.1 of the Franchise Agreement.
In addition to being considered a default, the franchisee is also responsible for reimbursing Gold Star for any charges the company incurs due to the shortage of funds in the franchisee's account. This means that if Gold Star's bank charges a fee because the electronic transfer fails due to insufficient funds, the franchisee must cover that fee.
This policy highlights the importance of careful financial management for Gold Star franchisees. Franchisees need to ensure they have enough funds in their designated business account to cover all fees and payments to Gold Star to avoid defaulting on their agreement and incurring additional charges. This requirement is fairly standard in franchising, as franchisors rely on timely payments to maintain their own operations and support services.