Is Gold Star liable for a Gold Star franchisee's loss of profits relating to an action involving the Marks?

According to Gold Star's 2025 Franchise Disclosure Document, Gold Star is generally not liable to a franchisee for any loss of profits or business opportunities relating to any action involving the Marks. However, there is an exception as specifically outlined in Section 6.8 of the agreement.

Section 6.8 describes a situation where a third party commences legal action against the franchisee challenging the franchisee's right to use the Marks. In this case, Gold Star may, at its sole discretion, assume the defense of the franchisee and shall indemnify the franchisee against all damages for infringement for which the franchisee is held liable in such action resulting from the franchisee’s authorized use of the Marks. This protection is conditional on the franchisee providing timely notice of the action, cooperating fully with Gold Star's counsel, and allowing Gold Star to retain ultimate control over the legal strategy.

However, if the franchisee fails to meet its obligations under Sections 6.8 and 6.9 with respect to any particular event, Gold Star's warranties and obligations under Sections 6.7 and 6.8 become void, and Gold Star has no liability for costs incurred or damages awarded against the franchisee. This highlights the importance of the franchisee's cooperation in protecting the Marks. Franchisees should be aware of these conditions and ensure they adhere to the outlined procedures to maintain the franchisor's support and potential indemnification.