Is diverting or collecting fees from customers by the franchisee a cause for Buildingstars to terminate the agreement?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
XI. DEFAULT AND TERMINATION
A. Termination by BUILDINGSTARS.
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- 30 Day Opportunity to Cure BUILDINGSTARS may at its option, and without prejudice to any other rights or remedies provided for in this Agreement or at law or in equity, terminate this Agreement for "good cause". (Provided that state law permits BUILDINGSTARS to terminate earlier if the "good cause" constitutes a default which is not curable). Without limitation as to other situations, good cause for termination also exists if FRANCHISEE or any guarantor of this Agreement:
- (1) Does not perform any and all of the lawful terms, conditions, and obligations of this Agreement, or the Confidential Operations Manual; or
- (2) Commits any other act which constitutes good cause under applicable state law or court decisions; or
- (3) Engages in any illegal, fraudulent, unfair or deceptive business practice, which, in the opinion of BUILDINGSTARS, adversely affects the operation, maintenance, or goodwill of the franchise; or
- (4) Fails to operate the Business for a period of three (3) consecutive days without justifiable cause; or
- (5) Diverts or collects any fees from Customers in violation of Section VI.D, above which provide that Customer billings and collections are to be done by BUILDINGSTARS; or
- (6) Fails to properly service Customers in accordance with BUILDINGSTARS' standards and within the spirit and intent of this Agreement. (By way of illustration and not limitation, a failure to properly service Customers will occur if at least three Customer complaints are made regarding th
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, Buildingstars has the right to terminate the franchise agreement if the franchisee diverts or collects fees from customers. Specifically, if a Buildingstars franchisee violates Section VI.D of the agreement, which states that customer billing and collections are to be handled by Buildingstars, it constitutes grounds for termination.
This condition is listed under the section detailing default and termination of the agreement. Buildingstars may terminate the agreement for "good cause," which includes the franchisee not adhering to the terms and obligations outlined in the agreement or the Confidential Operations Manual. Engaging in illegal or fraudulent business practices that negatively affect the franchise's operation or goodwill also constitutes good cause.
Furthermore, Buildingstars may terminate the agreement if the franchisee fails to operate the business for three consecutive days without a valid reason or fails to properly service customers according to Buildingstars' standards. In most cases, Buildingstars will provide at least 90 days' written notice of termination, unless state law requires a longer or permits a shorter period. The notice will include the reasons for termination and give the franchisee an opportunity to address the issues, although this cure period may not apply if the cause for termination is not curable under state law.