What specific claims related to employment are Gold Star franchisees required to indemnify the company against?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
19.1 Independent Contractor. Nothing in this Agreement creates a partnership, employment or agency relationship between FRANCHISEE and the COMPANY, or authorizes FRANCHISEE to make any contract, agreement, warranty, or representation on the COMPANY's behalf or to incur any debt or other obligation in the COMPANY's name. The COMPANY will in no event assume liability for, or be deemed liable hereunder as a result of, any such action by FRANCHISEE. The COMPANY will not be liable to any third party for any act or omission of FRANCHISEE in any of its operations hereunder (including, without limitation, any claim or action against FRANCHISEE for negligent hiring, sexual harassment, or employment discrimination) or any claim or judgment arising against FRANCHISEE. FRANCHISEE will indemnify, defend and hold the COMPANY harmless from and against any and all claims, debts, liabilities or obligations arising directly or indirectly from, as a result of or in connection with the operation of the Store (excluding, however, liabilities caused by (i)
FRANCHISEE's proper reliance on or use of procedures or materials provided by the COMPANY, or (ii) the COMPANY's gross negligence), and will pay all costs (including, without limitation, legal and accounting fees) incurred by the COMPANY in defending against and/or responding to them. FRANCHISEE WILL DISPLAY PROMINENTLY AT ITS PLACE OF BUSINESS, ON ALL CORRESPONDENCE WITH THIRD PARTIES, AND IN ANY PRINTED MATERIALS BEARING ITS NAME OR BUSINESS LOCATION, A STATEMENT THAT THE STORE IS INDEPENDENTLY OWNED AND OPERATED BY FRANCHISEE.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, franchisees are required to indemnify, defend, and hold Gold Star harmless from claims arising from the operation of the store. This includes, without limitation, any claim or action against the franchisee for negligent hiring, sexual harassment, or employment discrimination. This means that if a Gold Star franchisee is sued for such claims, they are responsible for covering Gold Star's legal costs and any resulting judgments, protecting the company from liabilities caused by the franchisee's business practices.
This indemnification extends to all claims, debts, liabilities, or obligations arising directly or indirectly from the operation of the store. However, there are exceptions: franchisees are not responsible for liabilities caused by their proper reliance on or use of procedures or materials provided by Gold Star, or by Gold Star's gross negligence. This indicates that Gold Star takes responsibility for its own actions and guidance, but holds franchisees accountable for their operational conduct.
For a prospective Gold Star franchisee, this highlights the importance of maintaining sound employment practices and adhering to all applicable laws to minimize the risk of such claims. It also emphasizes the need for adequate insurance coverage to protect against potential liabilities. Franchisees should also ensure they thoroughly understand and properly implement Gold Star's provided procedures and materials to avoid any issues that could arise from their use. Displaying prominently at the place of business, on all correspondence with third parties, and in any printed materials bearing its name or business location, a statement that the store is independently owned and operated by franchisee.