Can Gold Star seek injunctive relief in addition to liquidated damages for a franchisee's breach of confidentiality?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
o take any action but may take any action it deems appropriate. FRANCHISEE also agrees not to contest or aid in contesting, directly or indirectly, the COMPANY's right, title, ownership or interest in or to, or the validity or enforceability of, any copyrights, Confidential Material or the System, or contest the COMPANY's sole right to register, use or franchise or license others to use any such copyrights, the System or the Confidential Material, during or after the term of this Agreement or any extension or renewal thereof.
- 12.2 Damages for Violations. If FRANCHISEE discloses any Confidential Material to any person, firm or entity or otherwise breaches its obligations under this Section 12, or if one of the Related Parties or any other person subject to FRANCHISEE's control makes such a disclosure or otherwise breaches its obligations under this Section 12 as a result of the failure of FRANCHISEE
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, Gold Star is not precluded from seeking injunctive or other relief for a franchisee's breach of confidentiality, even if liquidated damages are assessed. Specifically, if a franchisee discloses confidential material, they must pay Gold Star $100,000 as liquidated damages, which is not considered a penalty. This acknowledges that precisely calculating Gold Star's actual damages would be extremely difficult, and the $100,000 represents a reasonable pre-estimate of such damages.
This means that even if a Gold Star franchisee is required to pay $100,000 for breaching confidentiality, Gold Star can still pursue a court order to stop the franchisee from further disclosing confidential information. This is in addition to receiving monetary compensation for the damages caused by the initial breach.
For a prospective Gold Star franchisee, this clause highlights the importance of maintaining confidentiality. The financial penalty is significant, and the potential for injunctive relief means that Gold Star can act swiftly to prevent further damage to its confidential information. This dual approach provides Gold Star with strong protection against breaches of confidentiality, which is common in franchising to protect trade secrets and proprietary information.