What recourse does a Gold Star franchisee have if Gold Star unreasonably delays the approval of a new supplier?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
ls and capacity to supply FRANCHISEE's needs promptly and reliably, who have been approved in writing by the COMPANY as a source of such item prior to any purchases by FRANCHISEE from such supplier and who have not thereafter been disapproved. FRANCHISEE acknowledges that the COMPANY may from time to time receive rebates or discounts from such suppliers.
- 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.
- 7.4 Modification of Products.
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, the franchisee must submit a written request for approval. Gold Star has the right to inspect the supplier's facilities and require samples for testing, with the franchisee bearing the reasonable costs of inspection and testing. Gold Star is then required to notify the franchisee in writing within a reasonable time, not to exceed 60 days, after receiving the request and samples, whether the approval is granted. However, Gold Star is not required to approve any particular supplier or item.
Regarding recourse for delays, the FDD states that Gold Star assumes no liability to the franchisee for any neglect or delay of any request for approval. This means that if Gold Star delays the approval process beyond what the franchisee considers reasonable, the franchisee has limited legal recourse against Gold Star for the delay itself.
This lack of recourse is a significant risk for prospective Gold Star franchisees. While Gold Star is expected to respond within 60 days, there is no guarantee of approval, and the franchisee bears the costs of the application regardless of the outcome. Furthermore, the franchisee has essentially no leverage if Gold Star delays the decision beyond the 60-day timeframe. Franchisees should carefully consider this provision and factor in potential delays and associated costs when evaluating the financial viability of the franchise.