To whom is the Operating Fee paid for a Gold Star franchise?

According to Gold Star's 2025 Franchise Disclosure Document, the Operating Fee is payable to Gold Star or its designated operator. This fee is levied if a franchisee fails to maintain the restaurant's operations according to Gold Star's system standards, prompting Gold Star to operate or appoint someone to operate the restaurant until the issues are resolved. The fee is equivalent to 125% of Gold Star's or its designee's operational costs during this period.

This arrangement means that if a Gold Star franchisee's restaurant falls below the required operational standards, they could face significant additional costs. Not only would they lose control over the restaurant's operation temporarily, but they would also be responsible for covering 125% of the costs incurred by Gold Star or its designee to rectify the situation. This could severely impact the franchisee's profitability and cash flow.

Prospective franchisees should carefully consider the implications of this fee and ensure they fully understand Gold Star's operational standards and have a plan in place to maintain those standards. It would be prudent to inquire about the typical costs associated with such interventions and the criteria used to determine when a restaurant is not meeting standards. Understanding these factors can help a franchisee mitigate the risk of incurring this substantial fee.