After the Buildingstars franchise agreement is terminated, for how long does the non-compete clause regarding providing services to Buildingstars customers remain in effect?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
- A. FRANCHISEE agrees that during the term of this Agreement and for one (1) year after the Transfer, expiration or termination for any reason of this Agreement or the entry of a final order of a court of competent jurisdiction enforcing this covenant, whichever is later, FRANCHISEE and any of its relatives, or associates, shall not, directly or indirectly, for FRANCHISEE or for any other person or entity (except BUILDINGSTARS):
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- Provide or attempt to provide (or others of the opportunity to provide), directly or indirectly, any Services to any Customer for which FRANCHISEE has rendered services under this Agreement or to which FRANCHISEE has been introduced by or about which FRANCHISEE has received information by being a Buildingstars franchisee.
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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, the restrictive covenant regarding providing services to Buildingstars customers is in effect during the term of the Franchise Agreement and for one year after the transfer, expiration, or termination of the agreement. This one-year period also applies after the entry of a final order of a court enforcing this covenant, whichever date is later. This means that even after the franchise agreement ends, a franchisee is restricted from providing services to customers they served or were introduced to through Buildingstars for a period of one year.
Specifically, the franchisee, including any relatives or associates, is prohibited from directly or indirectly providing or attempting to provide any services to any customer for whom the franchisee rendered services under the agreement or to whom the franchisee was introduced as a Buildingstars franchisee. This restriction is in place to protect Buildingstars' customer relationships and business interests.
If a franchisee breaches this provision, they must pay Buildingstars a fee equal to three times the monthly amount the customer agreed to pay for the services. This financial penalty serves as a deterrent against violating the non-compete agreement and further protects Buildingstars' revenue stream and customer base. The terms of the restrictive covenant are assignable by Buildingstars and will benefit Buildingstars as well as its successors and assigns.