What reliance should a franchisee place on representations or promises not contained in the Gold Star franchise agreement?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
FRANCHISEE ACKNOWLEDGES NEITHER THE COMPANY, NOR ANY OF ITS OFFICERS, EMPLOYEES, REPRESENTATIVES, BROKERS OR AGENTS, HAVE MADE (A) ANY REPRESENTATIONS, ACKNOWLEDGMENT, PROMISE, GUARANTEE, INDUCEMENT, UNDERTAKING OR WARRANTY (WRITTEN OR ORAL, EXPRESS OR IMPLIED) OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT, OR (B) ANY REPRESENTATIONS (WRITTEN OR ORAL, EXPRESS OR IMPLIED) AS TO THE ACTUAL, AVERAGE, POTENTIAL, PROJECTED OR FORECASTED SUCCESS, SALES, PROFITS, COSTS, INCOME OR EARNINGS OF A GOLD STAR CHILI RESTAURANT OR THE FRANCHISE BUSINESS TO BE CONDUCTED BY FRANCHISEE. FRANCHISEE FURTHER ACKNOWLEDGES THAT FRANCHISEE RECOGNIZES THAT THE NATURE OF THE BUSINESS CONDUCTED BY GOLD STAR CHILI RESTAURANTS MAY EVOLVE AND CHANGE OVER TIME; THAT FRANCHISEE'S INVESTMENT INVOLVES BUSINESS RISKS NOT SUSCEPTIBLE TO THE COMPANY'S OR FRANCHISEE'S CONTROL; AND THAT FRANCHISEE'S SUCCESS WILL BE LARGELY DEPENDENT ON FRANCHISEE'S OWN BUSINESS ABILITIES AND EFFORTS.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, a franchisee should not rely on any representations, promises, guarantees, or warranties that are not explicitly stated in the franchise agreement. This includes any assurances regarding the potential success, sales, profits, costs, income, or earnings of a Gold Star Chili restaurant.
This acknowledgement is part of the agreement, where the franchisee confirms they had the opportunity to clarify any unclear information and to seek independent legal and financial advice before signing. It emphasizes that the franchisee's success is largely dependent on their own business abilities and efforts, and that the business involves risks beyond the control of Gold Star.
This provision protects Gold Star from claims based on verbal or implied promises made by its officers, employees, representatives, brokers, or agents. It reinforces the importance of having all agreements and understandings documented in the written franchise agreement. Prospective franchisees should ensure that any important representations or promises are included in the written agreement before signing, as verbal assurances may not be enforceable.
Furthermore, any approvals or consents required from Gold Star must be obtained in writing to be effective. Gold Star makes no warranties or guarantees and assumes no liability by providing any waiver, approval, consent, or suggestion to the franchisee. This underscores the importance of written documentation and the franchisee's responsibility to conduct their own due diligence and not solely rely on the franchisor's input.