What recourse does a Gold Star franchisee have if they disagree with Gold Star's decision to disapprove a supplier?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 7.3 Alternative Suppliers.
If FRANCHISEE desires to purchase from a source that is not on the COMPANY's then current approved supplier list for the item desired to be purchased, or to obtain approval to offer merchandise or services or use items that are not on the COMPANY's then current list of approved Products, FRANCHISEE shall submit to the COMPANY a written request for approval in accordance with the procedures then prescribed by the COMPANY for submission of requests for approval of products and suppliers.
The COMPANY shall have the right to require that its representatives be permitted to inspect the source's facilities, that samples from the source be submitted to the COMPANY or its designee for testing and evaluation and that FRANCHISEE pay the COMPANY a charge not to exceed the reasonable cost of the inspection and the actual cost of testing or other evaluation.
The COMPANY shall notify FRANCHISEE in writing within a reasonable time, not to exceed sixty (60) days, after receipt of FRANCHISEE's request and samples, whether such approval is granted.
The COMPANY reserves the right to reinspect facilities and items from time to time.
The COMPANY may revoke approval of any source or item that does not continue to meet any of the COMPANY's then current criteria.
The COMPANY shall not be required to approve any particular supplier or item.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, if a franchisee wants to purchase from a supplier not currently approved by Gold Star, they must submit a written request for approval following Gold Star's prescribed procedures. Gold Star can then inspect the supplier's facilities and request samples for testing and evaluation, charging the franchisee for the reasonable cost of inspection and testing. Gold Star will then notify the franchisee in writing within a reasonable time, not exceeding 60 days after receiving the request and samples, whether the approval is granted.
Gold Star reserves the right to reinspect facilities and items periodically and may revoke approval of any source or item that no longer meets their criteria. Gold Star is not required to approve any particular supplier or item. The FDD does not explicitly state what recourse a franchisee has if Gold Star disapproves a supplier, but it does state that Gold Star has the right to deny approval.
In practical terms, this means a Gold Star franchisee has limited recourse if Gold Star disapproves a supplier. The franchisee can request approval for an alternative supplier, but Gold Star has significant discretion in making that decision. This highlights the importance of the franchisee understanding and agreeing with Gold Star's supplier standards and approval processes before entering into the franchise agreement.
Prospective franchisees should discuss the supplier approval process with Gold Star during their due diligence. Specifically, they should ask about the criteria used to evaluate suppliers, the frequency with which approvals are granted or denied, and whether there are any mechanisms for appealing a disapproval decision. Understanding these aspects can help a franchisee assess the potential impact on their business and make an informed decision about investing in a Gold Star franchise.