Is Gold Star liable for any act or omission of the franchisee in its operations?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
19.1 Independent Contractor. Nothing in this Agreement creates a partnership, employment or agency relationship between FRANCHISEE and the COMPANY, or authorizes FRANCHISEE to make any contract, agreement, warranty, or representation on the COMPANY's behalf or to incur any debt or other obligation in the COMPANY's name. The COMPANY will in no event assume liability for, or be deemed liable hereunder as a result of, any such action by FRANCHISEE. The COMPANY will not be liable to any third party for any act or omission of FRANCHISEE in any of its operations hereunder (including, without limitation, any claim or action against FRANCHISEE for negligent hiring, sexual harassment, or employment discrimination) or any claim or judgment arising against FRANCHISEE. FRANCHISEE will indemnify, defend and hold the COMPANY harmless from and against any and all claims, debts, liabilities or obligations arising directly or indirectly from, as a result of or in connection with the operation of the Store (excluding, however, liabilities caused by (i)
FRANCHISEE's proper reliance on or use of procedures or materials provided by the COMPANY, or (ii) the COMPANY's gross negligence), and will pay all costs (including, without limitation, legal and accounting fees) incurred by the COMPANY in defending against and/or responding to them. FRANCHISEE WILL DISPLAY PROMINENTLY AT ITS PLACE OF BUSINESS, ON ALL CORRESPONDENCE WITH THIRD PARTIES, AND IN ANY PRINTED MATERIALS BEARING ITS NAME OR BUSINESS LOCATION, A STATEMENT THAT THE STORE IS INDEPENDENTLY OWNED AND OPERATED BY FRANCHISEE.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, Gold Star is not liable to third parties for any act or omission of the franchisee in its operations. This includes claims or actions against the franchisee for negligent hiring, sexual harassment, or employment discrimination.
The franchisee is considered an independent contractor and is responsible for operating their Gold Star location. The franchisee cannot make any agreements or incur any debt on behalf of Gold Star. Franchisees must also prominently display a statement that the store is independently owned and operated.
The franchisee is required to indemnify, defend, and hold Gold Star harmless from any claims, debts, liabilities, or obligations arising from the store's operation. An exception exists for liabilities caused by the franchisee's proper reliance on procedures or materials provided by Gold Star, or by Gold Star's gross negligence. This means that if a customer or employee sues the Gold Star franchisee, the franchisee is responsible for covering the costs, including legal fees, unless the issue stemmed from Gold Star's direct actions or materials.