What is the purpose of the Brand Building Fees collected from franchisees for Gold Star?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
uire you to pay all or a portion of Brand Building Fees to such fund in accordance with the provisions below.
Brand Building Fees collected from you and other Franchisees are currently used in the Brand Building Fund supervised by Gold Star or its designee, currently GSCAA (see Note 3 to Item 6 of this disclosure document).
The Brand Building Fund may disseminate advertising through various media, including print, radio, television, billboards, newspaper and digitally via e-mail and internet advertising. Media coverage may be local, regional or national in scope, all in the discretion of Gold Star or its designee. During the fiscal year ended December 31, 2024, media coverage was typically local in scope and limited to the Greater Cincinnati DMA. In Gold Star's discretion, smaller scale marketing programs, based on the amount of Brand Building Fees generated may be implemented in other selected geographical areas. Currently, such smaller scale marketing programs have been implemented in Lexington, and Somerset Kentucky. Gold Star (and its designee) has complete discretion regarding the Brand Building Fund. Gold Star is not obligated to spend any amount on
advertising in the area or territory where you are located. Neither Gold Star nor GSCAA is under any obligation to make expenditures of collected Brand Building Fees in any particular geographic area or for you or any other particular Franchisee, or to ensure that you or any other particular Franchisee benefits directly or on a pro rata basis from the Brand Building Fund.
GSCAA's in-house marketing team utilizes agencies and freelance contractors for the following: media planning and buying, creative development and production, digital development and production, social media marketing, consumer research, marketing analytics, and public and media relations. Third party technology platforms are used by the in-house marketing department to support the services and activities listed above*.*
You may develop advertising materials for your own use, at your own cost; provided that, you must obtain Gold Star's prior written approval of these advertising materials.
Gold Star has designated GSCAA to administer the Brand Building Fund and the Brand Building Fees which are currently used for the Brand Building Fund. Gold Star and GSCAA have sole discretion to determine, approve or disapprove the creative concepts, materials and media used in the Brand Building Fund and the placement, type, scope and allocation of Brand Building Fund advertising and activities.
The Gold Star Chili Franchisee Advisory Council (the "Council") advises GSCAA on advertising policies. Currently, members of the Council are existing Franchisees (or their respective owners) and are elected by majority vote of Gold Star's Franchisees. Gold Star has the power to form, dissolve or change the Council. The Council serves in an advisory capacity only and does not have operational or decision-making power. Gold Star may, in its sole discretion, expand, modify or eliminate the Council or its responsibilities and is under no obligation to conduct any future advertising program with respect to written governing documents.
All Franchisees must participate in the Brand Building Fund and in any future advertising programs that Gold Star requires. You must pay Brand Building Fees equal to up to 7% of weekly Gross Sales. The Brand Building Fee will not be increased by more than 1% in a 12-month period. Franchisees operating Special Purpose Outlets typically pay Brand Building Fees of 1% less than Traditional Outlets. Your Brand Building Fees are due weekly by Tuesday for the week ended the immediately prior Sunday (based on Gross Sales for the week just ended) and, unless otherwise required by Gold Star, must be paid via a preauthorized debit arrangement that allows Gold Star to cause your bank account to be debited for fees and charges under the Franchise Agreement. If the Brand Building Fund is suspended or terminated, or whenever the required Brand Building Fee percentage is less than 7%, Gold Star has the right to require you to expend directly on the placement of local advertising and promotion whatever amount Gold Star may specify (but not to exceed, when aggregated with any Brand Building Fees required to be paid to the Brand Building Fund, 7% of Gross Sales in any calendar year). Certain supplier payments also are contributed to the Brand Building Fund (see Note 3 to Item 6 of this disclosure document and the "Revenue from Franchisee Purchases" Section in Item 8 of this disclosure document).
Although not obligated to do so under the Franchise Agreement or otherwise, Gold Star's company-owned Restaurants pay Brand Building Fees to the Brand Building Fund on the same
basis as you and other Franchisees. Gold Star also may, but is not obligated to, make an additional cash contribution to the Brand Building Fund as Gold Star determines in its sole discretion. Gold Star is not obligated to continue either of the foregoing practices.
The Brand Building Fund is not audited; however, an unaudited report of the use and application of the Brand Building Fund will be prepared annually by Gold Star or its designee and a copy of the report will be provided to any Franchisee upon written request.
Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 26–36)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, Brand Building Fees are collected from franchisees and are currently used in the Brand Building Fund, which is supervised by Gold Star or its designee, GSCAA. These fees are intended for local, regional, and/or national advertising, promotional, and public relation activities. The Brand Building Fund may use various media for advertising, including print, radio, television, billboards, newspaper, and digital platforms like e-mail and internet advertising.
The fees collected can be used to cover reasonable salaries, administrative costs, and overhead incurred by Gold Star or GSCAA in their advertising activities. The funds not spent in the fiscal year are retained for future use. For the fiscal year ended December 31, 2024, the Brand Building Fund allocated its resources as follows: 6% on the production of advertisements and other promotional materials, 40% for media placement, 6% for general and administrative expenses, and 47% for other expenses, including advertising agency fees, sponsorship expenses, public relations expenses, website and e-mail marketing initiatives, local advertising, and miscellaneous expenses.
Gold Star has complete discretion regarding the Brand Building Fund, and is not obligated to spend any amount on advertising in the area or territory where a franchisee is located, nor is it obligated to ensure that any franchisee benefits directly or on a pro rata basis from the Fund. Franchisees are also required to spend at least $10,000 on grand opening advertising and promotion within 3 months of opening, and Gold Star may contribute $5,000 from the Brand Building Fund for additional grand opening advertising and support, contingent on the franchisee's compliance with requirements.
Prospective franchisees should note that participation in the Brand Building Fund and any future advertising programs is mandatory. Franchisees must pay Brand Building Fees equal to up to 7% of weekly Gross Sales, with the fee not increasing by more than 1% in a 12-month period. Special Purpose Outlets typically pay Brand Building Fees of 1% less than Traditional Outlets. These fees are due weekly and typically paid via a preauthorized debit arrangement. If the Brand Building Fund is suspended or terminated, Gold Star can require franchisees to spend up to 7% of Gross Sales directly on local advertising and promotion.