How is the Account Sales Fee financed for a Buildingstars franchisee?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
BUILDINGSTARS or if FRANCHISEE is willing to accept a new customer account from BUILDINGSTARS, FRANCHISEE must pay BUILDINGSTARS an Account Sales Fee of four hundred percent (400%) of the Monthly Contract Revenue which is generated from the new customer account. The Account Sales Fee is payable in full even if FRANCHISEE loses the new customer account for any reason, however, BUILDINGSTARS will replace the lost new customer account only under the terms and conditions set forth in Section VI.J. below.
The Account Sales Fee is payable in cash or in the following manner:
- FRANCHISEE may request new customer accounts in increments of $1,000 of Monthly Contract Revenue. At such time as FRANCHISEE submits said request, FRANCHISEE shall pay BUILDINGSTARS $200 per $1,000 Monthly Contract Revenue it requested. This will serve as the
first monthly payment under the Promissory Note that finances the Account Sales Fee. The amount of the Promissory Note will be 400% of the Monthly Contract Revenue. The Promissory Note will be payable without interest in 20 equal monthly installments. For example, if FRANCHISEE requests new customer accounts which would generate $2,000 in Monthly Contract Revenue, it would pay $400 (1/20 of $2,000 x 400%) ("Monthly Payment") and sign a Promissory Note guaranteed by the Guarantors under this Agreement which will contain substantially the same terms and conditions as set forth in Exhibit III attached hereto. The second monthly payment will be due after the first full month FRANCHISEE has provided service to said new customer account. BUILDINGSTARS may withhold the monthly Promissory Note payments from the amount of billings BUILDINGSTARS collects for the FRANCHISEE, as more fully described in Section VI.D below. A default under the Promissory Note shall also be deemed a default under this Agreement.
- BUILDINGSTARS may, but is not required to, offer FRANCHISEE new customer accounts. If FRANCHISEE decides to accept the new customer account, which decision is solely within the FRANCHISEE'S discretion, FRANCHISEE must either pay the Account Sales Fee in cash or execute a Promissory Note guaranteed by the Guarantors under this Agreement substantially in the form set forth in Exhibit III for the amou
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars' 2025 Franchise Disclosure Document, the Account Sales Fee can be financed through a Promissory Note. If a franchisee requests new customer accounts in increments of $1,000 of Monthly Contract Revenue, they will pay Buildingstars either $100 or $200 (depending on which chunk is referenced) for every $1,000 of Monthly Contract Revenue requested. This payment serves as the first monthly payment under the Promissory Note. The amount of the Promissory Note will be either 200% or 400% of the Monthly Contract Revenue, payable without interest in 20 equal monthly installments.
For example, if a Buildingstars franchisee requests new customer accounts that would generate $2,000 in Monthly Contract Revenue, they would pay $400 as a down payment (if referencing the second chunk) and sign a Promissory Note. The second monthly payment is due after the first full month the franchisee provides service to the new customer account. Buildingstars may withhold the monthly Promissory Note payments from the franchisee's billings.
Alternatively, Buildingstars may offer new customer accounts to a franchisee. In this case, the franchisee can either pay the Account Sales Fee in cash or execute a Promissory Note. This Promissory Note is guaranteed by guarantors and is payable without interest in eighteen monthly installments, with the first installment due after the first full month of service to the new customer. A default on the Promissory Note is considered a default under the Franchise Agreement. Buildingstars may also withhold monthly Promissory Note payments from the franchisee's billings.