What are the implications if a Gold Star franchisee purchases from a source that is later disapproved by Gold Star?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 7.3 Alternative Suppliers.
If FRANCHISEE desires to purchase from a source that is not on the COMPANY's then current approved supplier list for the item desired to be purchased, or to obtain approval to offer merchandise or services or use items that are not on the COMPANY's then current list of approved Products, FRANCHISEE shall submit to the COMPANY a written request for approval in accordance with the procedures then prescribed by the COMPANY for submission of requests for approval of products and suppliers.
The COMPANY shall have the right to require that its representatives be permitted to inspect the source's facilities, that samples from the source be submitted to the COMPANY or its designee for testing and evaluation and that FRANCHISEE pay the COMPANY a charge not to exceed the reasonable cost of the inspection and the actual cost of testing or other evaluation.
The COMPANY shall notify FRANCHISEE in writing within a reasonable time, not to exceed sixty (60) days, after receipt of FRANCHISEE's request and samples, whether such approval is granted.
The COMPANY reserves the right to reinspect facilities and items from time to time.
The COMPANY may revoke approval of any source or item that does not continue to meet any of the COMPANY's then current criteria.
The COMPANY shall not be required to approve any particular supplier or item.
- 7.4 Modification of Products.
The COMPANY may from time to time modify the list of approved Products and/or suppliers in the Manual or otherwise in writing, and FRANCHISEE shall not, after receipt of notice of such modification, reorder any Product, or order from any supplier, that is no longer approved.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, Gold Star may modify the list of approved products and/or suppliers in the manual or in writing. After receiving notice of such modification, the franchisee must not reorder any product or order from any supplier that is no longer approved. This means a Gold Star franchisee must stay up-to-date on any modifications to the approved products and suppliers list.
If a Gold Star franchisee desires to purchase from a source not on the current approved supplier list, they must submit a written request for approval, following Gold Star's prescribed procedures. Gold Star has the right to inspect the source's facilities, request samples for testing and evaluation, and charge the franchisee for the reasonable cost of inspection and actual testing costs. Gold Star will then notify the franchisee in writing within a reasonable time, not exceeding 60 days, whether approval is granted.
Gold Star also reserves the right to reinspect facilities and items periodically and may revoke approval of any source or item that no longer meets their current criteria. Gold Star is not required to approve any particular supplier or item. Therefore, a Gold Star franchisee runs the risk of needing to find a new supplier if Gold Star revokes approval of a previously approved source.
This stipulation is fairly standard in franchising, as franchisors need to maintain quality control and brand consistency. However, it places the onus on the franchisee to remain compliant with Gold Star's supplier standards and adapt to changes in the approved supplier list, potentially incurring additional costs or disruptions to their supply chain.