Does the definition of 'Transfer' for a Buildingstars franchise include the grant or creation of any lien or encumbrance?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
- M. "Transfer" means and includes any voluntary or involuntary, direct or indirect, assignment, sale, gift conveyance, or other disposition of an Interest including without limitation: (a) transfer of any capital stock, partnership interest, limited liability interest or other ownership Interest of FRANCHISEE or its owners; (b) merger, consolidation or issuance of additional stock or ownership interests; (c) transfer in bankruptcy or dissolution of marriage or otherwise by operation of law or by order of court; (d) transfer to a personal representative upon disability or transfer upon the death of a majority owner; (e) the grant or creation of any lien or encumbrance (f) any sale, lease, sublease, or other transfer or disposition of any of the assets used in the performance of the Business, whether now owned or hereafter acquired, except in the normal and ordinary course of business; or (g) any change of control or management of the Business.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars' 2025 Franchise Disclosure Document, the definition of "Transfer" does include the grant or creation of any lien or encumbrance. This means that if a Buildingstars franchisee places a lien or encumbrance on their franchise interest, it is considered a transfer under the terms of the franchise agreement.
This is a significant point for prospective franchisees because any action that encumbers the franchise interest, such as taking out a loan secured by the franchise, could trigger the transfer provisions of the agreement. These provisions typically require Buildingstars' approval and may involve transfer fees or other conditions.
Buildingstars maintains broad discretion over transfers, as evidenced by the multiple conditions outlined for franchisee-initiated transfers. Franchisees need to be aware that even actions they might consider routine, like securing a business loan, could be classified as a transfer requiring franchisor consent. This clause protects Buildingstars' interests by ensuring they have control over who operates their franchises and under what conditions.