Must a Buildingstars franchisee be in compliance with their Franchise Agreement to transfer their franchise?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
B. By FRANCHISEE. BUILDINGSTARS has the right to reasonably disapprove any person or entity would have actual, legal or effective control over the Business and shall have the right to approve any Transfer. Consent to a Transfer shall not be deemed a waiver of BUILDINGSTARS' right to consent to any subsequent Transfers. BUILDINGSTARS will approve a sale, Transfer or change in ownership under the following conditions:
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- Governmental Compliance. The Transfer is conducted in compliance with applicable laws and regulations and the transferee has all permits and licenses necessary to operate the Business;
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- Prior Compliance. The FRANCHISEE has performed its obligations and duties under this Agreement and FRANCHISEE is not in default under this Agreement, or any other agreement with BUILDINGSTARS;
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Payments.
The transferor has satisfied all of its monetary obligations to BUILDINGSTARS, BUILDINGSTARS' Affiliates and suppliers under this Agreement and all other agreements it has with BUILDINGSTARS;
Release.
The FRANCHISEE, including all officers, directors and shareholders (as well as all guarantors under this Agreement) must execute a general release, in the form which we approve, of any and all claims against BUILDINGSTARS, BUILDINGSTARS' Affiliates, and their respective officers, directors, employees and agents;
Requirements of Transferee.
The transferee meets the established standards for new franchisees, is of good moral character, has a good credit rating, sufficient financial resources to operate the business and competent qualifications.
The transferee must execute a new Franchise Agreement with the standard terms and conditions then being offered in the FRANCHISEE'S state by BUILDINGSTARS and the owners must execute a personal guarantee.
Notwithstanding anything herein to the contrary, under no circumstances will BUILDINGSTARS be obligated to replace any customer accounts that have been transferred pursuant to the Transfer of Interest.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, a franchisee must be in compliance with the Franchise Agreement to transfer their franchise. Buildingstars will approve a transfer if the franchisee has performed all obligations and duties under the agreement and is not in default. This requirement ensures that the new franchisee is taking over a business that is in good standing with Buildingstars.
In addition to compliance with the existing agreement, the franchisee must also satisfy all monetary obligations to Buildingstars, its affiliates, and suppliers. Furthermore, the franchisee, including all officers, directors, shareholders, and guarantors, must execute a general release of any claims against Buildingstars and its affiliates. These conditions protect Buildingstars from potential liabilities and ensure a clean transfer of ownership.
The prospective transferee must also meet Buildingstars' standards for new franchisees, including demonstrating good moral character, a good credit rating, sufficient financial resources, and competent qualifications. The transferee is required to execute a new Franchise Agreement with the standard terms and conditions then being offered in the franchisee's state, and the owners must execute a personal guarantee. These requirements ensure that the new franchisee is capable of operating the Buildingstars business successfully and is committed to the brand's standards.