What is the liquidated damages amount a Gold Star franchisee must pay for disclosing Confidential Material?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
o take any action but may take any action it deems appropriate. FRANCHISEE also agrees not to contest or aid in contesting, directly or indirectly, the COMPANY's right, title, ownership or interest in or to, or the validity or enforceability of, any copyrights, Confidential Material or the System, or contest the COMPANY's sole right to register, use or franchise or license others to use any such copyrights, the System or the Confidential Material, during or after the term of this Agreement or any extension or renewal thereof.
- 12.2 Damages for Violations. If FRANCHISEE discloses any Confidential Material to any person, firm or entity or otherwise breaches its obligations under this Section 12, or if one of the Related Parties or any other person subject to FRANCHISEE's control makes such a disclosure or otherwise breaches its obligations under this Section 12 as a result of the failure of FRANCHISEE
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, a franchisee must pay $100,000 as liquidated damages for each breach if they disclose any Confidential Material to any person, firm, or entity. This also applies if a Related Party or any other person subject to the franchisee's control makes such a disclosure because the franchisee failed to take necessary precautions.
Gold Star states that this amount is not a penalty but a reasonable pre-estimate of the actual damages the company would incur. The FDD defines Confidential Material as information contained in the Manual, and other information about the Proprietary Products, the System and the Business, including customer and supplier lists.
This means that a Gold Star franchisee needs to be extremely careful about protecting confidential information, as the financial penalty for disclosure is significant. The franchisee is also responsible for ensuring that their employees and related parties also maintain confidentiality. Gold Star retains the right to seek injunctive or other relief in addition to the liquidated damages.