What happens to the rebates that Gold Star franchisees are required to assign?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
approved by Gold Star or otherwise approved by Gold Star. Franchisees, however, are required to assign to Gold Star or its designee all product and/or advertising rebates or allowances received from certain suppliers related to the Franchise (currently assignments are required for our soft drink supplier only). It is Gold Star's current practice to have these assigned payments made to GSCAA for deposit to and use in the Brand Building Fund. Gold Star receives product and/or advertising rebates or allowances from the same suppliers. The terms are the same for Gold Star and the Franchisees. Although not obligated to do so by the Franchise Agreement or any related agreement, it is Gold Star's current practice to transfer the product and/or advertising rebates and allowances Gold Star itself receives from these suppliers to the Brand Building Fund. Approximately $613,262 was received by GSCAA during the year ended December 31, 2024 pursuant to these supplier rebates and advertising allowances for Gold Star and its franchisees (the above information was derived from the books and records of GSCAA). GSCAA does not sell or lease products or services to franchisees or derive revenue from operations but merely receives Brand Building Fees and supplier assignment proceeds and
Source: Item 8 — Restrictions on Sources of Products and Services (FDD pages 21–25)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, franchisees are required to assign certain product and/or advertising rebates or allowances to Gold Star or its designee. Currently, this assignment is required only for the soft drink supplier. Gold Star's current practice is to have these assigned payments made to GSCAA (presumably Gold Star Chili Advertising Association) for deposit to and use in the Brand Building Fund.
Gold Star also receives product and/or advertising rebates or allowances from the same suppliers, and the terms are the same for both Gold Star and its franchisees. Although not obligated to do so, Gold Star's current practice is to transfer the rebates and allowances it receives to the Brand Building Fund as well. During the year ending December 31, 2024, GSCAA received approximately $613,262 pursuant to these supplier rebates and advertising allowances for both Gold Star and its franchisees.
GSCAA does not sell or lease products or services to franchisees or derive revenue from operations but merely receives Brand Building Fees and supplier assignment proceeds and oversees the Brand Building Fund as Gold Star's designee. This arrangement means that while franchisees are giving up rebates they would otherwise receive directly, the funds are being pooled to support brand-building activities that could benefit all franchisees. Prospective franchisees should inquire about the specific uses of the Brand Building Fund and how these activities are expected to drive revenue and customer traffic to their individual locations.