If Gold Star receives rebates from the soft drink supplier, are the terms the same for Gold Star and its franchisees?
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, the terms for product and advertising rebates or allowances from soft drink suppliers are the same for both Gold Star and its franchisees. However, franchisees are required to assign these rebates to Gold Star or its designee, which is currently GSCAA (Gold Star Chili Advertising Association).
GSCAA deposits these assigned payments into the Brand Building Fund. While Gold Star is not obligated to do so, it is their current practice to also transfer the rebates and allowances they receive from these suppliers into the Brand Building Fund. In 2024, GSCAA received approximately $613,262 from supplier rebates and advertising allowances for both Gold Star and its franchisees.
This arrangement means that while franchisees and Gold Star receive rebates under the same terms, the franchisees do not directly benefit from these rebates. Instead, the rebates are pooled into the Brand Building Fund, which is used for marketing and brand-building activities that are intended to benefit the entire Gold Star system. Prospective franchisees should consider the implications of this arrangement, as it affects how they receive and utilize supplier rebates.