If a Gold Star retail location is destroyed, what is the franchisee required to do to avoid default?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 14.4.4 Without the prior written consent of the COMPANY, FRANCHISEE ceases to operate the Business for more than 24-hour period if required to be operating during that time in the Manual or abandons the Business or the Store or, upon destruction of the Retail Location, fails to rebuild it and resume operation with a reasonable time.
However, cessation of the Business shall not constitute default of this Agreement if caused by condemnation, appropriation, expiration of the term of the Lease (except when due to FRANCHISEE's fault or neglect), or when rebuilding following destruction of the buildings at the Retail Location is prohibited by law or the Lease so long as FRANCHISEE is actively seeking a new location pursuant to Section 1.5, above, and is otherwise in compliance with this Agreement;
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, if a retail location is destroyed, the franchisee must rebuild it and resume operation within a reasonable time to avoid defaulting on the franchise agreement. However, there are exceptions to this requirement.
Cessation of business due to condemnation, appropriation, or the expiration of the lease (unless caused by the franchisee's fault or neglect) does not constitute a default. Similarly, if rebuilding is prohibited by law or the lease, the franchisee will not be in default, provided they are actively seeking a new location as per Section 1.5 of the agreement and are otherwise in compliance with the agreement.
This clause protects the franchisee from being penalized for circumstances beyond their control, such as legal restrictions on rebuilding or actions by the landlord. However, it also places a responsibility on the franchisee to actively pursue a new location if rebuilding is not possible to maintain compliance with the franchise agreement.