Is Gold Star obligated to continue the practices of funding new restaurant openings and remodeled restaurant re-openings?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
Special Purpose Outlet is 4% of Gross Sales.
Note 3: Gold Star Currently has designated Gold Star Chili Advertising Association, an Ohio nonprofit corporation ("GSCAA"), to oversee the franchisee Brand Building fund (the "Brand Building Fund"). Gold Star is the sole member of GSCAA, and a majority of GSCAA's current board of trustees are officers, directors, employees or shareholders of Gold Star. Brand Building Fees are imposed by Gold Star under the Franchise Agreement. The Brand Building Fund does not itself impose fees. All Brand Building Fees are nonrefundable; however, when a Franchisee opening a new Restaurant reviews and approves the New Restaurant Opening Marketing Plan, it is the current practice for those expenses (currently, at least $15,000) to be funded by GSCAA and the Franchisee to reimburse their portion in the amount of $10,000, the remainder funded by GSCAA. In addition, it is currently the practice for Gold Star to spend $10,000 of Brand Building Fees on advertising and support to a Franchisee who "re-opens" a Restaurant that it has spent more than $50,000 remodeling and invoice the Franchisee for their contribution in the amount of $5,000 for grand re-opening marketing and promotion. Neither Gold Star nor G
Source: Item 6 — OTHER FEES (FDD pages 12–18)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, Gold Star is not obligated to continue its current practices of funding new restaurant openings and remodeled restaurant re-openings. For new restaurant openings, Gold Star currently funds at least $15,000 of the New Restaurant Opening Marketing Plan expenses through the Gold Star Chili Advertising Association (GSCAA), with the franchisee reimbursing $10,000. For remodeled restaurants, Gold Star currently spends $10,000 of Brand Building Fees on advertising and support when a franchisee spends more than $50,000 remodeling, and then invoices the franchisee for a $5,000 contribution towards grand re-opening marketing and promotion.
This means that while Gold Star has been contributing to these costs, they can discontinue this practice at any time. A prospective franchisee should not rely on receiving these funds when projecting their initial costs or remodel expenses.
It is important to note that the Brand Building Fees are nonrefundable, regardless of whether Gold Star continues to fund these opening and re-opening practices. Franchisees should inquire with Gold Star about their long-term plans for these funding practices and factor the potential loss of this support into their financial planning.