For how long after termination or expiration is a Gold Star franchisee prohibited from allowing their premises to be used for a competing business?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in | Summary |
|---|---|---|
| Franchise Agreement | ||
| r. Non-competition covenants after the Franchise is terminated or expires | Section 11 | No competing business for 3 years and within 10 miles of your Retail Location or any other Gold Star (existing or approved) franchise (including after assignment); no part of any owned or controlled premises in your Protected Territory to be used to any extent for any competing business for 3 years |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 42–45)
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, a franchisee is restricted from allowing their premises to be used for a competing business for a period of three years after the franchise is terminated or expires. This restriction applies to any premises the franchisee owns or controls within their protected territory.
This post-term covenant means that if a franchisee's agreement ends, they cannot immediately convert their former Gold Star location into a competing restaurant or allow another competing business to operate there. This is designed to protect Gold Star's market share and brand recognition by preventing confusion or direct competition from a former franchisee in the same area.
The non-compete agreement extends not only to operating a competing business directly but also to allowing any part of the owned or controlled premises to be used for such a business. This is a broad restriction that could prevent a former franchisee from leasing space to a competitor, even if they are not directly involved in running the competing business. Franchisees should carefully consider this restriction, especially if they own the property where their Gold Star restaurant is located, as it limits their options for the property after the franchise agreement ends.
Prospective franchisees should be aware of the geographic scope of this restriction as well, as it applies to their protected territory. It is important to fully understand the definition of "protected territory" in the Franchise Agreement to assess the potential impact of this non-compete clause on future business opportunities.