What is the purpose of Gold Star negotiating purchase arrangements with suppliers?

According to Gold Star's 2025 Franchise Disclosure Document, Gold Star negotiates purchase arrangements with suppliers to receive quantity discounts for franchisees and its company-owned restaurants. This suggests that Gold Star aims to leverage the collective buying power of its franchise system to secure more favorable pricing on essential goods and services.

This practice can benefit franchisees by lowering their operating costs, as the discounts obtained by Gold Star are passed on to them. This can improve the profitability of individual franchise locations. However, franchisees are obligated to purchase the majority of their supplies, approximately 90% to 95%, from Gold Star or its approved suppliers, ensuring uniformity and consistency across the brand.

While franchisees are generally required to use approved suppliers, they can request approval for alternative suppliers. However, Gold Star may inspect the source's facilities and require samples for testing, with the franchisee bearing the costs of inspection and evaluation. Gold Star does not disclose its criteria for supplier approval to franchisees, and it reserves the right to revoke approval of any source or item that no longer meets its standards. This system ensures quality control and brand consistency but may limit a franchisee's ability to seek out the absolute lowest prices independently.