What options does the Gold Star company have if a franchisee fails to maintain required insurance?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 18.5 Failure to Maintain Insurance. If FRANCHISEE fails to procure or maintain insurance as herein required, the COMPANY may at its option (but shall not be obligated to), in addition to its other rights and remedies hereunder, procure such insurance and, in such event, FRANCHISEE shall, upon demand from time to time, reimburse the COMPANY for the costs and premiums thereof together with interest thereon from the date such costs are incurred by COMPANY at the rate specified in Section 8.3, above.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, if a franchisee fails to maintain the required insurance, Gold Star has the option to procure the insurance themselves. If Gold Star chooses to obtain insurance on behalf of the franchisee, the franchisee is obligated to reimburse Gold Star for the costs and premiums associated with the insurance.
Furthermore, the franchisee will be charged interest on these costs from the date they are incurred by Gold Star. The interest rate applied will be as specified in Section 8.3 of the franchise agreement.
It is important to note that Gold Star's right to procure insurance for a non-compliant franchisee is optional and does not obligate them to do so. Gold Star also retains all other rights and remedies available to them under the franchise agreement, in addition to the option of obtaining insurance on the franchisee's behalf.