For what purposes are contributions to the Gold Star Brand Building Fund used?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
d Building Fees, the COMPANY or its designee may withhold and apply a portion of such remittance for the purpose of defraying such reasonable salaries, administrative costs and overhead as the COMPANY or its designee may incur in connection with the activities described in Section 9.3.5, below. The balance of any remittance remaining after such withholding will constitute a contribution paid by FRANCHISEE to the Brand Building Fund to be used exclusively for the purposes described in Section 9.3.3, below.
- 9.3.3 The Brand Building Fund, all contributions thereto, and any earnings thereon shall be used exclusively to meet any and all costs of maintaining, administering, directing and preparing local, regional and/or national advertising, promotional and public relations activities, including, among other things, the cost of creating, preparing, producing and conducting television, radio, magazine and newspaper advertising campaigns; direct mail and outdoor billboard advertising; marketing surveys and other public relations activities; employing advertising agencies and marketing, advertising and other consultants to assist therein; and providing promotional brochures and other marketing materials.
- 9.3.4 All contributions paid by franchisees to the Brand Building Fund shall be maintained in an account separate from the other monies of the COMPANY (or its designee), and shall not be used to defray any of the COMPANY's (or its designee's) expenses, except to repay any advances made by the COMPANY or such designee to the Brand Building Fund. The Brand Building Fund and the earnings therefrom shall not otherwise inure to the benefit of the COMPANY or its designee.
- 9.3.5 It is anticipated that all contributions to, and earnings of, the Brand Building Fund shall be expended during the taxable year within which the contributions and earnings are received. In any year, expenditures shall be made first out of earnings of the Brand Building Fund from previous years, next out of earnings of the Brand Building Fund in the current year, and finally out of contributions.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, the Brand Building Fund is used to cover the costs of advertising, promotional, and public relations activities. These activities can be local, regional, or national in scope. The fund can be used for creating and conducting advertising campaigns across various media such as television, radio, magazines, and newspapers, as well as direct mail and billboards. It also covers marketing surveys, public relations, and the employment of advertising agencies and consultants. Additionally, the fund can be used to provide promotional brochures and other marketing materials.
The funds are maintained separately from Gold Star's other monies and cannot be used for the company's expenses, except to repay any advances made by Gold Star to the Brand Building Fund. The fund's earnings also cannot benefit Gold Star directly. A portion of the Brand Building Fees can be withheld by Gold Star to cover reasonable salaries, administrative costs, and overhead related to these activities.
Gold Star may also make additional contributions from the Brand Building Fund towards grand opening advertising and support, at its discretion, if the franchisee meets certain requirements. Franchisees may request an annual report detailing the use and application of the Brand Building Fund. This ensures transparency in how the contributions are being utilized for the benefit of the Gold Star brand.