During the term of the Gold Star franchise, what activities are prohibited by the non-competition covenant?

According to the 2025 Gold Star Franchise Disclosure Document, during the term of the franchise agreement, franchisees are restricted from involvement in any competing business anywhere. Additionally, franchisees are prohibited from allowing any part of any owned or controlled premises within their protected territory to be used for any competing business. This non-compete agreement is detailed in Section 11 of the Franchise Agreement.

This means that while operating a Gold Star franchise, a franchisee cannot simultaneously own, operate, or have a financial interest in a similar business, regardless of its location. Furthermore, the franchisee must ensure that any property they own or control within their designated territory is not used to house or support a competing business. This restriction aims to protect Gold Star's market share and brand integrity by preventing franchisees from diverting resources or customers to rival ventures.

It is important for prospective franchisees to carefully consider the scope and implications of this non-competition covenant. The restriction extends to any competing business, which could be broadly interpreted. Franchisees should seek legal counsel to fully understand the limitations and ensure they do not inadvertently violate the agreement. Understanding the definition of 'competing business' is crucial to avoid potential conflicts and legal repercussions during the franchise term.

Note 1 of Item 17 states that all holders of an interest in the franchise must agree to be bound personally by the noncompete provisions of the Franchise Agreement. Note 2 states that the laws of certain states may restrict Gold Star's rights under covenants not to compete and that you should consult with your own legal advisor regarding such state laws.