What are 'Proprietary Products' for Gold Star, as defined by the company?

According to Gold Star's 2025 Franchise Disclosure Document, franchisees are required to purchase proprietary chili from the company. This requirement is part of the standard franchise arrangement. The franchise agreement between Gold Star as the franchisor and the franchisee as the customer necessitates that Gold Star perform various activities to support the brand. These activities do not directly transfer goods and services to the franchisee but represent a single performance obligation: the transfer of the franchise license.

The intellectual property associated with the franchise license is symbolic, deriving its utility from its connection to Gold Star's ongoing activities. The company's promise involves granting franchisees access to the brand's symbolic intellectual property throughout the license term. The services Gold Star provides are closely linked to the franchise license, forming a single performance obligation.

The transaction price in a standard franchise arrangement includes the initial franchise fees, continuing franchise fees (royalties), and advertising fees. Because Gold Star considers the licensing of the franchising right a single performance obligation, there is no need to allocate the transaction price. This means that the fees cover the right to operate under the Gold Star brand and utilize its systems, with the added requirement to purchase the chili itself directly from Gold Star.