Under what circumstances is a Gold Star franchisee obligated to pay the Company's costs and expenses?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 27. EXPENSES. If the COMPANY incurs any costs or expenses (including but not limited to attorneys' fees, court costs, other litigation expenses, settlement expenses or other expenses of any kind) in enforcing or protecting the COMPANY's rights under this Agreement, or any judgments, orders or awards relating thereto, or in preparation for or investigation or contemplation thereof, the COMPANY shall be entitled to recover from FRANCHISEE all such costs and expenses on demand, with interest from the date due pursuant to Section 8.3, above.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, a franchisee may be obligated to cover certain costs and expenses incurred by Gold Star. Specifically, if Gold Star incurs costs or expenses while enforcing or protecting its rights under the Franchise Agreement, the franchisee is responsible for reimbursing those costs. This includes, but is not limited to, attorney's fees, court costs, litigation expenses, and settlement expenses.
This obligation extends to costs incurred in preparation for, investigation, or contemplation of enforcing their rights. The franchisee is required to pay these costs on demand, along with interest accruing from the date the payment was originally due, as per Section 8.3 of the agreement.
Additionally, if a franchisee defaults under the terms of the Franchise Agreement, Gold Star has the right to enter the premises of the franchised restaurant and exercise authority over its operation until the default is cured. In this situation, the franchisee is responsible for covering Gold Star's labor costs, travel expenses, lodging, and other expenses reasonably incurred by Gold Star in sending a representative to enforce compliance with the agreement.
Furthermore, in certain lease situations, the franchisee is responsible for reimbursing Gold Star for all costs and expenses incurred if Gold Star acts to avoid termination of the lease. These lease provisions are outlined in Exhibit B to the Franchise Agreement.