Who ultimately controls the Gold Star Chili Advertising Association (GSCAA)?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
Special Purpose Outlet is 4% of Gross Sales.
Note 3: Gold Star Currently has designated Gold Star Chili Advertising Association, an Ohio nonprofit corporation ("GSCAA"), to oversee the franchisee Brand Building fund (the "Brand Building Fund"). Gold Star is the sole member of GSCAA, and a majority of GSCAA's current board of trustees are officers, directors, employees or shareholders of Gold Star. Brand Building Fees are imposed by Gold Star under the Franchise Agreement. The Brand Building Fund does not itself impose fees. All Brand Building Fees are nonrefundable; however, when a Franchisee opening a new Restaurant reviews and approves the New Restaurant Opening Marketing Plan, it is the current practice for those expenses (currently, at least $15,000) to be funded by GSCAA and the Franchisee to reimburse their portion in the amount of $10,000, the remainder funded by GSCAA. In addition, it is currently the practice for Gold Star to spend $10,000 of Brand Building Fees on advertising and support to a Franchisee who "re-opens" a Restaurant that it has spent more than $50,000 remodeling and invoice the Franchisee for their contribution in the amount of $5,000 for grand re-opening marketing and promotion. Neither Gold Star nor GSCAA is obligated to continue these practices. At the option of Gold Star, you must enter into and maintain a debit authorization agreement authorizing Gold Star to cause your bank account to be debited for charges, including Continuing Franchise Fees,
Source: Item 6 — OTHER FEES (FDD pages 12–18)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, Gold Star maintains ultimate control over the Gold Star Chili Advertising Association (GSCAA). The document specifies that Gold Star is the sole member of the GSCAA. Furthermore, a majority of the GSCAA's current board of trustees are officers, directors, employees, or shareholders of Gold Star. This structure concentrates decision-making power within Gold Star's leadership.
This control has significant implications for franchisees. While franchisees contribute to the Brand Building Fund, the franchisor, Gold Star, ultimately decides how these funds are spent. The FDD states that Brand Building Fees are imposed by Gold Star under the Franchise Agreement, and the Brand Building Fund itself does not impose fees. This arrangement means franchisees have limited direct influence over marketing and advertising strategies, as these are determined by Gold Star.
While the GSCAA oversees the Brand Building Fund, Gold Star's dominant position as the sole member and through its representation on the board of trustees ensures that it can direct the GSCAA's activities. Prospective franchisees should recognize that while they contribute financially to the Brand Building Fund, the franchisor retains control over its management and allocation. This is a common practice in franchising, where franchisors often maintain control over marketing and branding to ensure consistency and protect the brand's image.