What is the monetary penalty for each breach of confidentiality by a Gold Star franchisee?
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 Gold Star's 2025 Franchise Disclosure Document, a franchisee who discloses confidential material will be penalized. For each breach of confidentiality, the franchisee must pay Gold Star $100,000 as liquidated damages. This is not considered a penalty but rather a pre-estimated compensation for the damages Gold Star would incur.
This clause emphasizes the importance Gold Star places on protecting its confidential information. The substantial monetary amount suggests that any unauthorized disclosure is viewed as a serious offense with potentially significant repercussions for the franchisee. Franchisees must ensure that they, their employees, and any related parties under their control, take precautions to prevent the disclosure of confidential materials.
It is important to note that this payment does not prevent Gold Star from pursuing injunctive or other legal relief. This means that in addition to the monetary damages, Gold Star can seek court orders to stop further breaches or to enforce the confidentiality agreement. Prospective franchisees should carefully review the definition of "Confidential Material" within the franchise agreement to fully understand the scope of this obligation and the potential financial consequences of a breach.