What is the purpose of the GSCAA in relation to Gold Star?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
approved by Gold Star or otherwise approved by Gold Star. Franchisees, however, are required to assign to Gold Star or its designee all product and/or advertising rebates or allowances received from certain suppliers related to the Franchise (currently assignments are required for our soft drink supplier only). It is Gold Star's current practice to have these assigned payments made to GSCAA for deposit to and use in the Brand Building Fund. Gold Star receives product and/or advertising rebates or allowances from the same suppliers. The terms are the same for Gold Star and the Franchisees. Although not obligated to do so by the Franchise Agreement or any related agreement, it is Gold Star's current practice to transfer the product and/or advertising rebates and allowances Gold Star itself receives from these suppliers to the Brand Building Fund. Approximately $613,262 was received by GSCAA during the year ended December 31, 2024 pursuant to these supplier rebates and advertising allowances for Gold Star and its franchisees (the above information was derived from the books and records of GSCAA). GSCAA does not sell or lease products or services to franchisees or derive revenue from operations but merely receives Brand Building Fees and supplier assignment proceeds and
Source: Item 8 — Restrictions on Sources of Products and Services (FDD pages 21–25)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, the GSCAA (likely Gold Star Chili Advertising Association) serves as Gold Star's designee to oversee the Brand Building Fund. This fund is primarily supported by product and advertising rebates or allowances received from certain suppliers, notably the soft drink supplier. Franchisees are required to assign these rebates to Gold Star, which then directs them to the GSCAA for deposit into the Brand Building Fund. Gold Star also contributes its own rebates and allowances from these suppliers to the fund, although it is not contractually obligated to do so.
During the year ending December 31, 2024, the GSCAA received approximately $613,262 from these supplier rebates and advertising allowances for both Gold Star and its franchisees. The GSCAA itself does not engage in selling or leasing products or services to franchisees, nor does it derive revenue from operations. Its sole function is to manage the Brand Building Fund on behalf of Gold Star. These funds are intended to be used for brand-building activities, which benefit both the franchisor and the franchisees by increasing brand awareness and potentially driving more customers to their locations.
For a prospective franchisee, this arrangement means that a portion of the rebates they would normally receive from suppliers is instead directed towards a collective fund managed by the GSCAA. While franchisees do not directly control how these funds are spent, the intention is that the Brand Building Fund will enhance the overall brand image and marketing efforts of Gold Star, which should indirectly benefit their individual businesses. It's important for potential franchisees to understand how the Brand Building Fund is managed and what types of marketing activities it supports, as this can impact their own marketing strategies and budgets.