Can Gold Star require a franchisee to pay for the inspection of an alternative supplier?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
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, franchisees may be required to cover the costs associated with the inspection and evaluation of alternative suppliers. Specifically, if a franchisee wishes to purchase from a supplier not currently approved by Gold Star, they must submit a written request for approval.
Gold Star has the right to inspect the facilities of the proposed supplier and to test samples. The franchisee is responsible for paying a charge not exceeding the reasonable cost of the inspection, as well as the actual cost of testing or other evaluations. Gold Star will then notify the franchisee in writing, within 60 days of receiving the request and samples, whether the approval is granted.
Gold Star also retains the right to reinspect facilities and items periodically and may revoke approval if a source or item no longer meets their criteria. It is important to note that Gold Star is not obligated to approve any particular supplier or item. This policy ensures that Gold Star maintains control over the quality and standards of products used in its franchises, while also allowing franchisees the opportunity to propose alternative suppliers, subject to approval and cost coverage.