Is Gold Star obligated to indemnify a franchisee for expenses or damages in a proceeding involving any of the Confidential Information?

According to the 2025 Gold Star Franchise Disclosure Document, Gold Star is not obligated to indemnify a franchisee for expenses or damages in a legal proceeding involving any of the Confidential Information. Confidential Material includes information contained in the Manual and other information about its chili products, recipes and formulations, the System and the Business. The franchisee agrees that the Confidential Material constitutes proprietary highly confidential trade secrets. The franchisee must advise Gold Star promptly in writing if they learn of any claims made regarding, or unauthorized use of, any Confidential Material, whether by a Related Party or a third party.

While Gold Star is not obligated to take any action, it may take any action it deems appropriate. This means that if a franchisee is involved in a legal dispute related to Gold Star's Confidential Information, the franchisee will likely be responsible for their own legal expenses and any damages awarded against them.

This lack of indemnification could pose a financial risk to franchisees if they are sued or incur expenses due to the use or misuse of Gold Star's confidential information. It is important for prospective franchisees to understand this potential liability and factor it into their decision-making process. Franchisees may want to consider obtaining their own legal counsel and insurance to protect themselves against such risks.