Can a Buildingstars franchisee provide services to a customer if they were introduced to that customer through their affiliation with Buildingstars?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
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):
- a.
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.
- b.
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 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to the 2025 Buildingstars Franchise Disclosure Document, a franchisee is restricted from providing services to customers they were introduced to through their affiliation with Buildingstars, both during the term of the agreement and for one year after its termination. Specifically, the franchisee cannot directly or indirectly provide services to any customer for whom they rendered services under the agreement or were introduced to as a Buildingstars franchisee.
This restriction extends to the franchisee's relatives and associates as well. If a franchisee breaches this non-solicitation provision, they must pay Buildingstars a fee equal to three times the monthly amount the customer agreed to pay for the services. This measure is in place to protect Buildingstars' customer relationships and prevent franchisees from leveraging the Buildingstars network to establish independent businesses that compete with the franchise system.
This non-solicitation clause has significant implications for a prospective Buildingstars franchisee. It means that after the franchise agreement ends, the franchisee cannot immediately start a competing business and target Buildingstars customers. The one-year restriction limits the franchisee's ability to capitalize on relationships formed during the franchise term. The penalty of three times the monthly service fee further discourages franchisees from violating this clause, as it could result in a substantial financial burden.
Non-solicitation clauses are common in franchising to protect the franchisor's business model and customer base. However, the specific terms can vary, so it is important for a prospective franchisee to carefully review the non-solicitation clause in the Franchise Agreement and understand its implications. Franchisees should consider how this restriction might affect their future business plans after the franchise term ends and factor it into their decision-making process.