Under what conditions does a Gold Star franchisee remain liable for all obligations under the agreement after cancellation?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 26. SURVIVAL OF TERMS AND CONDITIONS. The obligations of FRANCHISEE under Sections 11, 12, 16, and 19.3 hereof, and any other FRANCHISEE obligations herein that are stated to, or are of a type that would reasonably, survive or apply beyond termination or expiration of this Agreement, shall survive any termination or expiration of this Agreement; and expiration or termination of this Agreement shall be without prejudice to the rights of the COMPANY against FRANCHISEE thereunder and with respect to other like matters that reasonably would survive the end of a franchise relationship, and shall not relieve FRANCHISEE of any of FRANCHISEE's obligations to the COMPANY existing at the time of expiration or termination.
- 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, certain obligations of the franchisee survive the termination or expiration of the Franchise Agreement. Specifically, the franchisee remains responsible for obligations outlined in Sections 11, 12, 16, and 19.3 of the agreement. Additionally, any other obligations that are explicitly stated to survive termination, or those that would reasonably apply beyond the termination or expiration of the agreement, also remain in effect.
This means that even after the Franchise Agreement ends, either through termination or expiration, the franchisee may still be liable for certain responsibilities. These surviving obligations can include, but are not limited to, those related to confidentiality, non-competition, indemnification, and any financial responsibilities that were outstanding at the time of termination. The termination or expiration of the agreement does not release the franchisee from these pre-existing duties to Gold Star.
Furthermore, Gold Star retains the right to pursue legal action against the franchisee for any breaches of the agreement, even after it has been terminated or expired. This includes the recovery of costs and expenses incurred by Gold Star in enforcing its rights, such as attorneys' fees and court costs. Therefore, franchisees should be aware that their responsibilities to Gold Star may extend beyond the formal end of the franchise relationship, and they should seek legal counsel to fully understand the scope of these continuing obligations.