Does Gold Star have any obligation regarding the franchisee's compliance with laws?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
FRANCHISEE shall promptly pay when due all taxes and assessments and all other indebtedness, liabilities and obligations of FRANCHISEE of every kind or character; shall comply with all federal, state and local laws and regulations (including, without limitation, the ADA, Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, and any other employment laws relating to the payment of employee-related taxes and withholdings, occupational hazards and health, dispensing of food products, consumer protection, trade regulation, employment discrimination and sexual harassment) and shall obtain in a timely manner any and all permits, certificates, registrations, or licenses necessary for the construction, refurbishing and full and proper operation of the Store.
FRANCHISEE agrees and acknowledges that FRANCHISEE alone will be responsible for compliance with the obligations under this Section, and that the COMPANY has no obligation with respect thereto.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, the franchisee is solely responsible for complying with all applicable federal, state, and local laws and regulations necessary for the construction, refurbishment, and operation of the store. This includes, but is not limited to, laws and regulations related to the Americans with Disabilities Act (ADA), Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, employment laws, payment of employee-related taxes and withholdings, occupational hazards and health, dispensing of food products, consumer protection, trade regulation, employment discrimination, and sexual harassment. The franchisee is also responsible for obtaining all necessary permits, certificates, registrations, or licenses.
Gold Star explicitly states that it has no obligation regarding the franchisee's compliance with these laws. This means that the franchisee bears the entire responsibility and risk associated with ensuring the business operates in accordance with all legal requirements. Gold Star's review and approval of the franchisee's construction plans are limited to assessing compliance with the company's design standards and do not extend to ensuring legal compliance.
This allocation of responsibility is typical in franchising, where franchisees are generally considered independent business owners. However, prospective franchisees should carefully review all applicable laws and regulations and consult with legal counsel to ensure they fully understand their obligations. Franchisees should also confirm they can secure all necessary permits and licenses before making any financial commitments. Failing to comply with laws and regulations can result in fines, penalties, and even the closure of the business.