How does Buildingstars collect the Royalty Fee from the franchisee?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
FRANCHISEE shall pay to BUILDINGSTARS, monthly (by the fifteenth (15th) day of the month following the month in which the sales were invoiced), a Royalty Fee equal to ten percent (10%) of Gross Sales from the Business throughout the term of this Agreement. For example, the Royalty Fee for February is payable by March 15th. BUILDINGSTARS will withhold the Royalty Fee from the amount of billings BUILDINGSTARS collects for the FRANCHISEE, as more fully described in Section VI.D below. No part of the Royalty Fee is refundable.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, the Royalty Fee is collected monthly. Specifically, Buildingstars franchisees are required to pay the Royalty Fee by the fifteenth day of the month following the month in which the sales were invoiced. For instance, the Royalty Fee for February's sales is due by March 15th.
Buildingstars withholds the Royalty Fee directly from the billings it collects on behalf of the franchisee. This means that Buildingstars takes the Royalty Fee amount out of the payments received from customers before disbursing the remaining balance to the franchisee.
This collection method provides convenience for the franchisee, as Buildingstars handles the deduction and remittance of the Royalty Fee. However, franchisees must ensure accurate reporting of Gross Sales, as underreporting can lead to audits and additional charges. If an audit reveals underreported Gross Sales, the franchisee will be responsible for reimbursing Buildingstars for the deficient Royalty Fees, along with interest. Furthermore, if the underpayment exceeds two percent, the franchisee will also be liable for all costs and expenses incurred by Buildingstars in conducting the audit.