What is the Protected Territory for a Gold Star Special Purpose Outlet?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 12 — Territory (FDD pages 36–37)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, franchisees do not receive an exclusive territory. The territory is limited to the operation of a Gold Star restaurant at a specific retail location approved by Gold Star. The franchisor agrees not to operate or license another to operate a Gold Star restaurant in a designated "Protected Territory," but this is subject to their right to establish "Special Purpose Outlets" within that territory. They also retain the right to sell or distribute Gold Star products through other channels in the Protected Territory.
A "Special Purpose Outlet" is defined as a Gold Star restaurant located inside venues such as shopping malls, zoos, airports, racetracks, amusement parks, fairgrounds, sports stadiums, hospitals, factories, bars, schools, gas stations, and special events. For these Special Purpose Outlets, the protected territory is limited to the relevant building or facility in which the outlet is located. This means that while a franchisee has some territorial protection, Gold Star retains considerable flexibility to operate or license additional outlets, especially in non-traditional locations, even within the franchisee's protected territory.
For a prospective franchisee, this limited territorial protection carries significant implications. The franchisee may face competition from other franchisees, company-owned outlets, or alternative distribution channels within their territory. The size of the Protected Territory depends primarily on the restaurant's location, with factors like population density, income levels, and traffic considered. However, for Special Purpose Outlets, the territory is extremely limited, confined only to the building or facility itself. This is a crucial consideration when evaluating the potential revenue and competitive landscape of a Gold Star franchise, particularly a Special Purpose Outlet.
Gold Star also retains the right to establish company-owned outlets and other distribution channels using the Gold Star trademarks, including through grocery stores, convenience stores, and other food service establishments. They may also expand through traditional and non-traditional distribution channels. 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. These factors highlight the importance of carefully assessing the specific location and market conditions before investing in a Gold Star franchise.