Corrected entry: From what the opening narration showed us, Mother Gothel found the golden flower almost immediately after it came to earth, and it specifically states that she hoarded its power for herself. Since she therefore wouldn't have told anyone for fear of them finding and taking the flower, and the narration implies pretty strongly that there is only the one flower, there's no way the legend about its powers could ever have started in the first place.
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Correction: It's possible that, over the centuries, people have gotten curious about Gothel and followed her to where she kept the flower. Even if Gothel killed them off (not unlikely, given her actions towards Flynn), they could have managed to spread the word to others about its power, starting the legend.
AJ Aneres