What is the radius, in miles, of the non-compete restriction around a Gold Star restaurant after termination?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
preparation or sale of any food items similar to the Products or any other business similar to the Restaurants, the Business or the System or that offers or grants franchises or licenses to others to operate such a business.
- 11.1.2 During the term of this Agreement and all extensions of renewal thereof and for three (3) years thereafter, FRANCHISEE shall not let or permit any part of any premises owned or controlled by FRANCHISEE in the Protected Territory to be used for a business, all or any part of which consists of a Similar Business.
- 11.1.3 Upon expiration or termination of this Agreement for any reason, or if FRANCHISEE assigns or transfers its interest in any Restricted Assets in any manner, then for a period of three (3) years thereafter, FRANCHISEE shall not, in any capacity whatsoever, either directly or indirectly, for itself, himself or herself, or through, on behalf of or in conjunction with any other person, partnership, limited liability company, corporation or organization, own, operate, maintain, engage in, participate in (as director, officer, manager, employee, consultant, representative, agent or otherwise) have any interest whatsoever in any Similar Business at a location within a radius of ten (10) miles of the Retail Location or any other Restaurant site then existing or approved for development.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, if the Franchise Agreement is terminated for any reason, the franchisee is subject to a non-compete restriction. For a period of three years after the termination, the franchisee cannot be involved in a similar business within a 10-mile radius of the original Gold Star location or any other existing or approved Gold Star site. This restriction applies to owning, operating, maintaining, or participating in any capacity in a similar business.
This non-compete clause prevents former franchisees from directly competing with Gold Star within a specific geographic area for a defined time. The restriction extends not only to the original restaurant location but also to any other Gold Star restaurant site that exists or is approved for development. This broadens the scope of the non-compete, ensuring that former franchisees cannot undermine any Gold Star locations in the vicinity.
The FDD states that the franchisee acknowledges the fairness and reasonableness of these restrictions, confirming they are not the result of overreach or coercion by Gold Star. The franchisee also acknowledges that adhering to these covenants will not cause undue hardship and will not impair their ability to find suitable employment. This suggests that Gold Star believes the restrictions are necessary to protect its business interests and brand reputation, while still allowing the franchisee to pursue other opportunities.
Prospective franchisees should carefully consider the implications of this non-compete agreement. While Gold Star asserts its fairness, franchisees should evaluate how this restriction might affect their future business endeavors if they decide to leave the Gold Star system. It is advisable to seek independent legal counsel to fully understand the scope and enforceability of the non-compete clause in their specific circumstances.