How is the fee for breach of restrictive covenant calculated for a Buildingstars franchisee?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
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- In the event that there is a breach of this provision, Franchisee shall pay BUILDINGSTARS a fee equal to 3 times the monthly amount agreed to be paid by the Customer for the Services.
Source: Item 23 — RECEIPT (FDD pages 43–217)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, a franchisee who breaches the restrictive covenant will be required to pay a fee to Buildingstars. This fee is calculated as three times the monthly amount that the customer agreed to pay for services.
This means that if a Buildingstars franchisee violates the agreement by providing services to a customer they serviced during their franchise term (or one they learned about through Buildingstars), they will owe Buildingstars a penalty. The amount is directly tied to the revenue generated from that specific customer. For example, if the customer's monthly service fee was $1,000, the franchisee would owe Buildingstars $3,000.
This provision is designed to protect Buildingstars' customer relationships and prevent franchisees from unfairly competing with the brand after their franchise agreement ends. The restrictive covenant extends for one year after the franchise agreement's termination, transfer, or expiration, or after a court order enforcing the covenant, whichever is later. Franchisees should carefully consider this when making business decisions, as violating this covenant can result in significant financial penalties.