What is a 'Protected Territory' for a Gold Star franchise?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 12 — Territory (FDD pages 36–37)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, franchisees are granted a 'Protected Territory,' but this territory is not exclusive. This means that while Gold Star agrees not to operate or license another to operate a Gold Star Restaurant within the franchisee's Protected Territory, they retain the right to establish 'Special Purpose Outlets' within that territory and to sell or distribute Gold Star products through other distribution channels.
The size and boundaries of a franchisee's Protected Territory depend primarily on the restaurant's location. For Special Purpose Outlets, the Protected Territory is limited to the building or facility in which the outlet is located. For other restaurants, Gold Star determines the Protected Territory boundaries by evaluating factors such as population density, income levels, and traffic counts.
It is important to note that franchisees do not have the right to acquire additional franchises within their Protected Territory or to relocate their franchise without Gold Star's written consent. Furthermore, Gold Star, its affiliates, and other franchisees are free to solicit customers or accept orders from anywhere, including a franchisee's Protected Territory. This lack of exclusivity and the presence of Special Purpose Outlets and alternative distribution channels within the Protected Territory could lead to competition and potentially impact a franchisee's sales and profitability.