Does Buildingstars have the discretion to require the franchisee to remain liable for the obligations of the assignee after a transfer?

According to Buildingstars's 2025 Franchise Disclosure Document, Buildingstars retains the discretion to require the franchisee and any guarantors to remain liable for the obligations of the assignee if Buildingstars approves an assignment. This means that even after a franchisee sells their Buildingstars franchise, they could still be held responsible if the new owner fails to meet their obligations under the franchise agreement.

This clause has significant implications for a franchisee looking to sell their business. Even with an approved transfer, the original franchisee isn't necessarily released from all responsibilities. Buildingstars can, at its discretion, require the seller to continue guaranteeing the performance of the new franchisee. This could include financial obligations, adherence to brand standards, and other contractual requirements.

For a prospective Buildingstars franchisee, this highlights the importance of carefully vetting potential buyers and understanding the long-term implications of the franchise agreement. While selling the franchise might seem like a clean break, the original franchisee could still be on the hook if the new owner falters. It would be prudent to seek legal counsel to fully understand the scope of this continuing liability and to negotiate terms that minimize potential risks during the transfer process.