Can Gold Star increase the minimum insurance coverage requirements?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
All insurance policies must name Gold Star Chili as an additional insured franchisor and contain and include standard waivers of subrogation. Franchisee agrees franchisee's insurance is primary and non-contributory. You cannot commence construction upon or open your Restaurant until you have obtained all the required insurance coverage and provided Gold Star with appropriate certificates of insurance showing your compliance with the requirements set forth above. If you fail to obtain and maintain this insurance coverage, we have the right to procure it on your behalf and to charge you for the cost plus interest. We have the right to increase the minimum coverage, decrease the maximum deductible, or require different or additional kinds of insurance to reflect inflation, changes in standards of liability, higher damage awards, or other relevant changes in circumstances. We must give you at least 30 days' written notice.
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, Gold Star has the right to modify the insurance requirements for franchisees. Specifically, Gold Star can increase the minimum coverage, decrease the maximum deductible, or require different or additional kinds of insurance. These changes can be made to reflect factors like inflation, changes in liability standards, higher damage awards, or other relevant changes in circumstances.
Gold Star must provide franchisees with at least 30 days' written notice before implementing any changes to the insurance coverage requirements. Additionally, franchisees are obligated to secure all required insurance coverage and provide Gold Star with proof of compliance before commencing construction or opening their restaurant. If a franchisee fails to maintain the required insurance, Gold Star has the right to procure the insurance on the franchisee's behalf and charge the franchisee for the cost, plus interest.
For a prospective Gold Star franchisee, this means that insurance costs could potentially increase during the term of the franchise agreement. It is important to factor in the potential for these changes when projecting operating expenses. Franchisees should maintain open communication with Gold Star regarding insurance requirements and promptly address any notices of changes to ensure continuous compliance and avoid potential penalties.