Is the Buildingstars franchisee responsible for collection activities if a customer is delinquent in payment?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
- D. Management Services BUILDINGSTARS will provide FRANCHISEE with billing and collection services on its behalf. However, BUILDINGSTARS is not responsible if the Customer fails to pay nor is BUILDINGSTARS required to commence any further action other than as set forth herein if they do not pay. FRANCHISEE is responsible for any and all collection activities if a Customer is delinquent in payment.
- a. Authorization to BUILDINGSTARS. FRANCHISEE hereby authorizes BUILDINGSTARS to bill each Customer on a scheduled basis, accept payments from customer accounts, collect accounts receivable, and maintain revenue records. BUILDINGSTARS will provide Customer imprinted invoices, envelopes and postage. In addition, BUILDINGSTARS will provide ongoing phone contact and reminder notices, both mailed and faxed to delinquent Customers on a monthly basis.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, the franchisee is responsible for collection activities if a customer is delinquent in payment. Buildingstars will provide billing and collection services on behalf of the franchisee. However, Buildingstars is not responsible if the customer fails to pay and is not required to commence any further action other than providing ongoing phone contact and reminder notices, both mailed and faxed to delinquent customers on a monthly basis.
This means that while Buildingstars handles the initial billing and reminders, the franchisee must take further action to recover unpaid amounts from customers. This could involve direct communication with the customer, employing a collection agency, or pursuing legal action. The franchisee is also responsible for paying all reasonable attorneys' fees, court costs, expenses, and out-of-pocket costs incurred to enforce collection from customers.
This arrangement places the onus of debt collection on the franchisee, which can be time-consuming and potentially costly. Franchisees should factor in these potential costs and time commitments when evaluating the Buildingstars franchise opportunity. It is important to have a plan for managing delinquent accounts and understand the legal and ethical considerations involved in debt collection.