Is a Buildingstars franchisee required to pay all of its own obligations when due?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 22: CONTRACTS]
FRANCHISEE shall obtain all licenses and permits required by any applicable federal, state, municipal, and local law, rule, regulation ordinance and code.
FRANCHISEE shall make timely filings of all tax returns and shall pay when due all taxes levied or assessed on, and related to this Agreement and the Business.
At no time is BUILDINGSTARS required to inform FRANCHISEE of any federal, state, municipal, or local law, rule, regulation, ordinance code, or tax.
- E.
Insurance FRANCHISEE must purchase and continuously maintain during the term of this Agreement at a minimum, the insurance coverages that BUILDINGSTARS requires and must furnish to BUILDINGSTARS evidence of such insurance as BUILDINGSTARS shall reasonably request, together with information concerning claims and losses under such insurance.
All policies of insurance required to be provided and maintained by FRANCHISEE by this Agreement must name BUILDINGSTARS, and its designated Affiliates and their successors and assigns as additional insureds (without obligation to pay the premium or any deductible amounts, all of which will be paid by FRANCHISEE), and must be carried with such responsible insurance companies and be in such form as is reasonably satisfactory to BUILDINGSTARS.
BUILDINGSTARS has the right to require FRANCHISEE to increase the types and amounts of insurance coverage as BUILDINGSTARS may, in its sole discretion, reasonably require.
Note that the insurance required by BUILDINGSTARS is the minimum insurance requirements and FRANCHISEE should consult with its own insurance agent to determine if the kinds and amounts of coverage are adequate to protect FRANCHISEE'S interests.
BUILDINGSTARS makes no representation, express or implied, that the policies and amounts are sufficient for FRANCHISEE'S needs.
BUILDINGSTARS may, in its sole option and from time to time, make insurance coverage available to FRANCHISEE.
If FRANCHISEE is eligible and wishes to participate in such insurance coverage, FRANCHISEE will be required to pay an Insurance Program Fee that is described in Section IV.F above.
If FRANCHISEE fails to obtain or maintain adequate insurance, BUILDINGSTARS may, in its sole discretion, obtain insurance for FRANCHISEE in FRANCHISEE'S name and FRANCHISEE shall
- I.
Right to Audit.
BUILDINGSTARS may, from time to time, cause one or more complete audits to be made of the affairs and records relating to the operations of the Business.
Upon request by BUILDINGSTARS, FRANCHISEE shall make such books, records and information available to BUILDINGSTARS or its designated representative at all reasonable times for review and audit by BUILDINGSTARS at FRANCHISEE'S place of business.
If it is found that FRANCHISEE underreported Gross Sales, FRANCHISEE will reimburse BUILDINGSTARS for the amount of the Account Sales Fees, Administration Fees, Royalty Fees, and Insurance Program Fees, if applicable, that would have been billed had billings been reported accurately, plus interest on those amounts at the rate of the lesser of one and one-half percent (1-1/2%) per month or the maximum legal rate in the jurisdiction where the Business is located.
In addition, in the event that an audit by BUILDINGSTARS results in a determination that any or all of the Account Sales Fee, Administration Fees, Royalty Fees and Insurance Program Fees, if applicable, paid to BUILDINGSTARS are deficient (underpaid) by more than two percent (2%), the FRANCHISEE shall promptly pay to BUILDINGSTARS any amounts shown to be due and all costs and expenses incurred by BUILDINGSTARS in conducting the subsequent audit to determine that the FRANCHISEE is reporting correctly (not the audit which disclosed the original deficiency), including salaries of BUILDINGSTARS' representatives, travel costs, room and board and audit fees.
Nothing contained herein shall constitute an agreement by BUILDINGSTARS to accept any payments after the same are due or commitment by BUILDINGSTARS to extend credit to or otherwise finance the FRANCHISEE'S operation of the Business.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, franchisees are responsible for fulfilling their financial obligations. Specifically, Buildingstars franchisees must ensure the timely filing of all tax returns and remit all taxes levied or assessed on the business and related to the Franchise Agreement. This includes compliance with all local, state, and federal tax requirements such as income tax, sales tax, and use tax, along with the necessary reporting.
Furthermore, Buildingstars franchisees are obligated to purchase and maintain the insurance coverages that Buildingstars requires throughout the term of the agreement. Franchisees must provide evidence of such insurance to Buildingstars upon request, including information about any claims and losses. These insurance policies must name Buildingstars and its affiliates as additional insureds; however, the franchisee is responsible for paying the premium and any deductible amounts. Buildingstars retains the right to adjust the required types and amounts of insurance coverage as it deems necessary.
Buildingstars may conduct audits of the franchisee's business operations and records. If an audit reveals that the franchisee underreported gross sales, the franchisee will be required to reimburse Buildingstars for the underpaid Account Sales Fees, Administration Fees, Royalty Fees, and Insurance Program Fees, plus interest. If the underpayment exceeds two percent (2%), the franchisee must also cover all costs and expenses incurred by Buildingstars in conducting the audit to verify accurate reporting. Buildingstars does not commit to accepting late payments or extending credit to finance the franchisee's business operations.