Can Gold Star use Brand Building Fees to cover salaries and administrative costs?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 9.3.2 Upon receipt of any Brand Building Fees, the COMPANY or its designee may withhold and apply a portion of such remittance for the purpose of defraying such reasonable salaries, administrative costs and overhead as the COMPANY or its designee may incur in connection with the activities described in Section 9.3.5, below.
The balance of any remittance remaining after such withholding will constitute a contribution paid by FRANCHISEE to the Brand Building Fund to be used exclusively for the purposes described in Section 9.3.3, below.
9.3.3 The Brand Building Fund, all contributions thereto, and any earnings thereon shall be used exclusively to meet any and all costs of maintaining, administering, directing and preparing local, regional and/or national advertising, promotional and public relations activities, including, among other things, the cost of creating, preparing, producing and conducting television, radio, magazine and newspaper advertising campaigns; direct mail and outdoor billboard advertising; marketing surveys and other public relations activities; employing advertising agencies and marketing, advertising and other consultants to assist therein; and providing promotional brochures and other marketing materials.
9.3.4 All contributions paid by franchisees to the Brand Building Fund shall be maintained in an account separate from the other monies of the COMPANY (or its designee), and shall not be used to defray any of the COMPANY's (or its designee's) expenses, except to repay any advances made by the COMPANY or such designee to the Brand Building Fund.
The Brand Building Fund and the earnings therefrom shall not otherwise inure to the benefit of the COMPANY or its designee.
- 9.3.5 It is anticipated that all contributions to, and earnings of, the Brand Building Fund shall be expended during the taxable year within which the contributions and earnings are received.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, Gold Star or its designee can use a portion of the Brand Building Fees to cover reasonable salaries, administrative costs, and overhead incurred in connection with Brand Building Fund activities. The remaining balance of the Brand Building Fees after these deductions will be considered a contribution to the Brand Building Fund, which is used exclusively for specific purposes. These purposes include maintaining, administering, and directing local, regional, and national advertising, promotional, and public relations activities.
Specifically, the Brand Building Fund can cover the costs of creating and conducting advertising campaigns across various media such as television, radio, magazines, and newspapers. It also includes direct mail, outdoor billboard advertising, marketing surveys, and other public relations activities. Gold Star may also use the fund to employ advertising agencies, marketing consultants, and to provide promotional brochures and other marketing materials.
All contributions paid by franchisees to the Brand Building Fund are to be kept in a separate account from Gold Star's other monies. These funds cannot be used to cover Gold Star's expenses, except to repay any advances made by Gold Star to the Brand Building Fund. The Brand Building Fund and its earnings should not benefit Gold Star or its designee, other than for the specified uses. This separation of funds and restrictions on their use are designed to ensure that the Brand Building Fees are used for their intended purpose of promoting the Gold Star brand.
Gold Star is expected to expend all contributions to, and earnings of, the Brand Building Fund during the taxable year in which they are received. An annual report on the use and application of the Brand Building Fund will be prepared by Gold Star or its designee and provided to franchisees upon written request. This provides franchisees with some transparency regarding how the Brand Building Fees are being utilized.