When is the Liquidated Damages Fee due to Gold Star upon abandonment or discontinuance of the franchise?

According to Gold Star's 2025 Franchise Disclosure Document, the Liquidated Damages Upon Discontinuation or Abandonment fee is due upon abandonment or discontinuance of the franchise. This fee is calculated by multiplying the average monthly continuing franchise fees during the 12 months preceding the abandonment or discontinuance by the lesser of 24 or the number of months remaining in the franchise term. This fee is payable to Gold Star and is non-refundable.

For a prospective franchisee, this means that if they abandon or discontinue their Gold Star franchise, they will owe Gold Star a liquidated damages fee. The amount of this fee will depend on the average monthly continuing franchise fees they paid during the previous 12 months and the remaining term of the franchise agreement. For example, if a franchisee's average monthly continuing franchise fees were $1,000 and they had 18 months remaining on their franchise agreement, the liquidated damages fee would be $18,000.

This fee is intended to compensate Gold Star for the losses they incur as a result of the franchisee's abandonment or discontinuance of the franchise. It is important for prospective franchisees to understand this fee and factor it into their decision-making process. Franchisees should carefully consider the potential costs of abandoning or discontinuing their franchise before making a commitment to Gold Star.