Is Gold Star required to establish and maintain Brand Building funds, or is it discretionary?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
romotion of the System (Section 9.3 of the Franchise Agreement).
Advertising; Our Brand Building Fund.
Gold Star is not obligated by the Franchise Agreement to conduct any advertising for your franchised Restaurant or any other franchised Restaurant. We have nevertheless established the Brand Building Fund, the purpose of which is to conduct advertising and other marketing activities which promote Gold Star's business, products and services under the Marks. Gold Star reserves the right to establish additional advertising funds in addition to the Brand Building Fund, and may change, merge or dissolve the Brand Building Fund and any other future advertising fund in Gold Star's sole discretion. If Gold Star does establish additional advertising funds, Gold Star may require you to pay all or a portion of Brand Building Fees to such fund in accordance with the provisions below.
Brand Building Fees collected from you and other Franchisees are currently used in the Brand Building Fund supervised by Gold Star or its designee, currently GSCAA (see Note 3 to Item 6 of this disclosure document).
The Brand Building Fund may disseminate advertising through various media, including print, radio, television, billboards, newspaper and digitally via e-mail and internet advertising. Media coverage may be local, regional or national in scope, all in the discretion of Gold Star or its designee. During the fiscal year ended December 31, 2024, media coverage was typically local in scope and limited to the Greater Cincinnati DMA. In Gold Star's discretion, smaller scale marketing programs, based on the amount of Brand Building Fees generated may be implemented in other selected geographical areas. Currently, such smaller scale marketing programs have been implemented in Lexington, and Somerset Kentucky. Gold Star (and its designee) has complete discretion regarding the Brand Building Fund. Gold Star is not obligated to spend any amount on
advertising in the area or territory where you are located. Neither Gold Star nor GSCAA is under any obligation to make expenditures of collected Brand Building Fees in any particular geographic area or for you or any other particular Franchisee, or to ensure that you or any other particular Franchisee benefits directly or on a pro rata basis from the Brand Building Fund.
GSCAA's in-house marketing team utilizes agencies and freelance contractors for the following: media planning and buying, creative development and production, digital development and production, social media marketing, consumer research, marketing analytics, and public and media relations. Third party technology platforms are used by the in-house marketing department to support the services and activities listed above*.*
You may develop advertising materials for your own use, at your own cost;
Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 26–36)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, Gold Star is not obligated to establish and maintain Brand Building funds. The establishment and maintenance of these funds are at Gold Star's discretion. However, all franchisees must participate in the Brand Building Fund and any future advertising programs that Gold Star requires. Franchisees are obligated to pay Brand Building Fees, which can be up to 7% of weekly Gross Sales. These fees are typically due weekly by Tuesday for the week ended the immediately prior Sunday and are collected via preauthorized debit.
Gold Star retains the right to establish additional advertising funds beyond the Brand Building Fund and can modify or dissolve the Brand Building Fund or any other future advertising fund at its sole discretion. If the Brand Building Fund is suspended or terminated, or if the required Brand Building Fee percentage is less than 7%, Gold Star can require franchisees to spend directly on local advertising and promotion, up to 7% of Gross Sales in any calendar year when combined with any Brand Building Fees required.
Brand Building Fees collected from franchisees are used in the Brand Building Fund, which is supervised by Gold Star or its designee, currently GSCAA. The funds may be used for advertising through various media, including print, radio, television, billboards, newspaper, and digital channels. Media coverage may be local, regional, or national, at the discretion of Gold Star or its designee. Gold Star is not obligated to spend any amount on advertising in the franchisee's specific area or territory, nor is it obligated to ensure that any franchisee benefits directly or on a pro rata basis from the Brand Building Fund.
For a prospective franchisee, this means that while participation in the Brand Building Fund is mandatory, the benefits derived from it in their specific location are not guaranteed. They must pay the required fees, but Gold Star has broad discretion over how those funds are spent and where advertising efforts are focused. This arrangement is fairly common in franchising, where advertising benefits are often spread across the entire system rather than targeted to individual locations.