Are the remedies available to Gold Star under the franchise agreement exclusive?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 1.3 Protected Territory.
Except for the protections provided in this Section 1.3, the franchise and other rights granted herein are non-exclusive.
The COMPANY agrees not to operate or license another to operate a Restaurant within the territory defined on the cover page hereof (the "Protected Territory") so long as FRANCHISEE: (i) fully complies with all methods, procedures, standards and specifications required by the COMPANY in the Manual (defined in Section 3.3 below) or otherwise in writing; and (ii) does not violate any of the other provisions of this Agreement or has cured such violation in the time period provided for herein.
Notwithstanding the foregoing, the COMPANY may (x) establish or license another to establish one or more Special Purpose Outlets (as defined below) within the Protected Territory and (y) sell or otherwise distribute within the Protected Territory products similar to or the same as those offered by the Restaurant through alternative channels of distribution (including without limitation grocery and convenience stores and internet, direct mail and catalog sales); provided, however, that in the event that the Retail Location is a Special Purpose Outlet, the COMPANY will not operate or license another to operate an additional Restaurant in the same building as the Special Purpose Outlet.
A "Special Purpose Outlet" is defined as a Gold Star Chili restaurant located inside shopping malls or centers, zoos, airports, race tracks, amusement parks, fairgrounds, sports stadiums, hospitals, factories, bars, schools, gas stations, and special events.
Nothing herein shall limit the COMPANY's rights or activities outside of the Protected Territory in any respect whatsoever (without limiting the generality of the foregoing, it is expressly agreed that no exclusive, protected or other territorial rights of any kind whatsoever outside of the Protected Territory, including any contiguous market area, is granted or to be inferred to or for FRANCHISEE).
Nothing herein shall limit the COMPANY, its affiliates or any other franchisee or licensee in soliciting or accepting orders from customers anywhere whether within or outside of the Protected Territory.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
Based on the 2025 Gold Star Franchise Disclosure Document, the franchise rights granted to a franchisee are generally non-exclusive, with a specific exception for a protected territory. According to Section 1.3, Gold Star agrees not to operate or license another to operate a restaurant within the franchisee's defined Protected Territory, as indicated on the cover page, as long as the franchisee fully complies with all required methods, procedures, standards, and specifications, and does not violate any other provisions of the Franchise Agreement.
However, this protection is not absolute. Gold Star retains the right to establish or license others to establish Special Purpose Outlets within the Protected Territory. These Special Purpose Outlets include locations inside shopping malls or centers, zoos, airports, race tracks, amusement parks, fairgrounds, sports stadiums, hospitals, factories, bars, schools, gas stations, and special events. Furthermore, Gold Star can sell or distribute products similar to those offered by the restaurant through alternative channels of distribution, such as grocery and convenience stores, internet sales, direct mail, and catalogs, within the Protected Territory. The only exception to this is that Gold Star will not operate or license another to operate an additional Restaurant in the same building as the Special Purpose Outlet if the Retail Location is a Special Purpose Outlet.
Outside the Protected Territory, Gold Star's rights and activities are not limited in any way. The agreement explicitly states that no exclusive, protected, or other territorial rights of any kind are granted or inferred to the franchisee outside of their Protected Territory, including any contiguous market area. Additionally, neither Gold Star, its affiliates, nor any other franchisee or licensee is restricted from soliciting or accepting orders from customers anywhere, whether within or outside the Protected Territory. This means that while a franchisee has some territorial protection, Gold Star retains significant flexibility to operate and license other outlets and channels of distribution, even within the franchisee's territory.