Which supplier's rebates are Gold Star franchisees currently required to assign to Gold Star?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
approved by Gold Star or otherwise approved by Gold Star. Franchisees, however, are required to assign to Gold Star or its designee all product and/or advertising rebates or allowances received from certain suppliers related to the Franchise (currently assignments are required for our soft drink supplier only). It is Gold Star's current practice to have these assigned payments made to GSCAA for deposit to and use in the Brand Building Fund. Gold Star receives product and/or advertising rebates or allowances from the same suppliers. The terms are the same for Gold Star and the Franchisees. Although not obligated to do so by the Franchise Agreement or any related agreement, it is Gold Star's current practice to transfer the product and/or advertising rebates and allowances Gold Star itself receives from these suppliers to the Brand Building Fund. Approximately $613,262 was received by GSCAA during the year ended December 31, 2024 pursuant to these supplier rebates and advertising allowances for Gold Star and its franchisees (the above information was derived from the books and records of GSCAA). GSCAA does not sell or lease products or services to franchisees or derive revenue from operations but merely receives Brand Building Fees and supplier assignment proceeds and
Source: Item 8 — Restrictions on Sources of Products and Services (FDD pages 21–25)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, franchisees are required to assign rebates or allowances received from certain suppliers to Gold Star or its designee. Currently, this assignment requirement applies specifically to Gold Star's soft drink supplier. These assigned payments are directed to the Gold Star Chili Advertising Association (GSCAA) for deposit into and use within the Brand Building Fund. During the year ending December 31, 2024, GSCAA received approximately $613,262 from supplier rebates and advertising allowances for both Gold Star and its franchisees.
Gold Star also receives product and/or advertising rebates or allowances from the same suppliers, with terms identical to those offered to franchisees. While not obligated by the Franchise Agreement, Gold Star's current practice is to also transfer its own rebates and allowances from these suppliers to the Brand Building Fund. This fund is managed by GSCAA, which acts as Gold Star's designee, overseeing the Brand Building Fund without directly selling products or services to franchisees or generating revenue from operations.
This arrangement ensures that both the franchisor and franchisees contribute to a collective fund aimed at enhancing the brand. For a prospective franchisee, this means that a portion of the rebates they would typically receive from the soft drink supplier will instead be directed towards the Brand Building Fund, which is intended to benefit the entire Gold Star system through advertising and promotional activities. It is important for potential franchisees to understand this assignment and how the Brand Building Fund is managed, as it impacts their potential revenue and marketing efforts.