What are the potential challenges and opportunities for a Gold Star franchisee associated with operating in a non-exclusive territory (Item 12), considering the potential for competition from other franchisees?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
There is no guarantee that future programs will be similar to past programs.
Item 12
Territory
You will not receive exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
Your Franchise is limited to the operation of 1 Gold Star Restaurant at a specific Retail Location, which must be approved by Gold Star. We agree not to operate or license another to operate a Gold Star Restaurant in a territory we designate in your Franchise Agreement (your "Protected Territory"), subject to our right to establish certain "Special Purpose Outlets" in the Protected Territory and to sell or distribute Gold Star products using the Marks through alternate distribution channels in the Protected Territory. A "Special Purpose Outlet" is a Gold Star Restaurant located inside a shopping mall or center, zoo, airport, race track, amusement park, fairgrounds, sports stadium, hospital, factory, bar, school, gas station, and special event. You are not granted (nor should you infer) any exclusive, protected, or territorial rights of any kind whatsoever outside of the Protected Territory, including any contiguous market area.
The size of your Protected Territory depends primarily upon the location of your Restaurant. The Protected Territory for a Special Purpose Outlet will be the relevant building or facility. The Protected Territory boundaries for other Restaurants are those set forth in Franchisees' Franchise Agreements. In determining Protected Territory boundaries, Gold Star evaluates a number of factors, including density of the population, earnings of the populace, and traffic counts.
Gold Star has established and plans to continue establishing company-owned outlets and other channels of distribution using the Marks, including company-owned Restaurants and distribution through grocery stores, convenience stores, other food service establishments, establishments or concessions located within other facilities (such as zoos, airports, race tracks, amusement parks, fairgrounds, sports stadiums, special events and the like) and food brokers, and also may expand through or establish other traditional and non-traditional distribution channels, methods and venues.
You do not receive the right to acquire additional Franchises within your Protected Territory, or contiguous territories or anywhere else. You do not receive the right to relocate your Franchise and must obtain Gold Star's prior written consent in order to change your Retail Location.
You are free to solicit customers or accept orders in any geographic area, just as Gold Star, its affiliates and other Franchisees may solicit customers or accept orders from anywhere, including your Protected Territory or the territory of any other Franchisee.
Neither Gold Star nor any affiliate of Gold Star operates or franchises, or has any present plans to operate or franchise, any business selling or leasing under different trade names or trademarks, goods or services similar to those to be offered by you.
The continuation of your Protected Territory rights is not dependent upon the achievement of a certain sales volume, market penetration or other contingency.
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, franchisees do not receive an exclusive territory. This means a Gold Star franchisee may face competition from other franchisees, outlets that Gold Star owns, other distribution channels, or competitive brands that Gold Star controls. The franchise is limited to operating one Gold Star Restaurant at a specific retail location approved by Gold Star. Gold Star agrees not to operate or license another to operate a Gold Star Restaurant in a designated "Protected Territory," but this is subject to Gold Star's right to establish "Special Purpose Outlets" within that territory and to sell or distribute Gold Star products through alternate distribution channels. Special Purpose Outlets include locations inside shopping malls, zoos, airports, and other similar venues.
The size of the Protected Territory depends primarily on the restaurant's location. For Special Purpose Outlets, the Protected Territory is the building or facility itself. For other restaurants, the boundaries are in the Franchise Agreement. Gold Star considers population density, income levels, and traffic counts when determining these boundaries. Gold Star may establish company-owned outlets and other distribution channels using the Gold Star marks, including company-owned restaurants, grocery stores, convenience stores, and other food service establishments.
A Gold Star franchisee does not have the right to acquire additional franchises within their Protected Territory or elsewhere. They also cannot relocate their franchise without Gold Star's prior written consent. However, franchisees are free to solicit customers or accept orders in any geographic area, just as Gold Star, its affiliates, and other franchisees can solicit customers from anywhere, including the franchisee's Protected Territory. The continuation of Protected Territory rights is not dependent on achieving a certain sales volume or market penetration.