How does the Buildingstars financing of the Initial Franchise Fee (Item 10) affect the franchisee's obligations regarding termination (Item 9)?
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 the services rendered by the Business within any consecutive ninety day period because of dissatisfaction with services provided by the Business.)
Subject to applicable law and except as otherwise provided in this Agreement, BUILDINGSTARS will give the FRANCHISEE at least ninety (90) days prior written notice of
What This Means (2025 FDD)
Based on the 2025 Buildingstars Franchise Disclosure Document, the document does not specify how the financing of the initial franchise fee directly affects a franchisee's obligations regarding termination. However, the FDD does outline general causes for termination by Buildingstars.
The FDD states that Buildingstars may terminate the agreement for "good cause," which includes failing to perform the obligations of the agreement or the Confidential Operations Manual, engaging in illegal or deceptive business practices, failing to operate the business for three consecutive days without justifiable cause, diverting fees from customers, or failing to properly service customers according to Buildingstars' standards. Buildingstars will typically provide at least 90 days' written notice of termination, unless state law requires a longer or shorter period.
Prospective franchisees should inquire with Buildingstars about how financing arrangements for the initial franchise fee might specifically impact their termination obligations. For example, it would be prudent to understand if outstanding loan balances or payment defaults on the promissory note related to the initial franchise fee could trigger termination clauses or affect the franchisee's ability to transfer the franchise.