What is the limitation on Gold Star regarding operating or licensing another Restaurant in the same building as a Special Purpose Outlet?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding the foregoing, the COMPANY may (x) establish or license another to establish one or more Special Purpose Outlets (as defined below) within the Protected Territory and (y) sell or otherwise distribute within the Protected Territory products similar to or the same as those offered by the Restaurant through alternative channels of distribution (including without limitation grocery and convenience stores and internet, direct mail and catalog sales); provided, however, that in the event that the Retail Location is a Special Purpose Outlet, the COMPANY will not operate or license another to operate an additional Restaurant in the same building as the Special Purpose Outlet.
A "Special Purpose Outlet" is defined as a Gold Star Chili restaurant located inside shopping malls or centers, zoos, airports, race tracks, amusement parks, fairgrounds, sports stadiums, hospitals, factories, bars, schools, gas stations, and special events.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, Gold Star may establish or license Special Purpose Outlets within a franchisee's protected territory. However, if a retail location is designated as a Special Purpose Outlet, Gold Star will not operate or license another restaurant in the same building as that Special Purpose Outlet.
A "Special Purpose Outlet" is defined in the FDD as a Gold Star Chili restaurant located inside shopping malls or centers, zoos, airports, race tracks, amusement parks, fairgrounds, sports stadiums, hospitals, factories, bars, schools, gas stations, and special events.
This clause protects franchisees from direct, internal competition within specific venues. For example, Gold Star could not place a full-service restaurant in the same building as a smaller, special-purpose Gold Star location in an airport. This limitation aims to balance Gold Star's ability to expand its brand presence through non-traditional venues while safeguarding the investment of franchisees who operate these specialized outlets.