In the context of a Buildingstars franchise transfer, what constitutes 'Interest being transferred' for the purpose of calculating the transfer fee?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
fications. The transferee must execute a new Franchise Agreement with the standard terms and conditions then being offered in the FRANCHISEE'S state by BUILDINGSTARS and the owners must execute a personal guarantee. Notwithstanding anything herein to the contrary, under n
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, the transfer fee is based on the 'Interest being transferred'. The document specifies that the transfer fee is the lesser of $4,000 or 10% of the total sales price of the interest being transferred. This sales price includes any down payments or amounts financed in lieu of the Franchise Fee. However, the transfer fee will not be less than $1,500.
In practical terms, this means that if a Buildingstars franchisee decides to sell their franchise, the transfer fee calculation will depend on the agreed-upon sales price. For example, if the total sales price is $30,000, the transfer fee would be 10% of that, which is $3,000. If the total sales price is $50,000, 10% would be $5,000; however, the transfer fee is capped at $4,000. If the sales price is only $10,000, 10% would be $1,000, but the franchisee would still need to pay the minimum transfer fee of $1,500.
This fee is paid by the transferee, the person or entity buying the franchise. It's important to note that Buildingstars does not determine the value of the business during a transfer. However, Buildingstars retains the right to withhold consent to the transfer if they reasonably judge that the purchase price or terms of the sale are not economically feasible for the proposed buyer. Buildingstars may notify the franchisee of the reasons for withholding approval, but Buildingstars's approval does not imply any warranty that the sale price or terms are economically feasible.
Prospective franchisees should carefully consider these transfer terms, as they impact the financial aspects of selling their Buildingstars franchise in the future. Understanding how the transfer fee is calculated and the conditions under which Buildingstars might withhold consent is crucial for making informed decisions about buying and potentially selling a Buildingstars franchise.