How are Buildingstars franchisees' monthly payments for notes receivable handled?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
Notes receivable consist of non-interest promissory notes from franchisees for the payment of initial franchise fees and account sales fees. Payment terms are monthly ranging from 12 to 20 months and withheld from the franchisee's monthly contract revenue. The allowance for credit losses related to notes receivable is not significant.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 34–43)
What This Means (2025 FDD)
According to Buildingstars' 2025 Franchise Disclosure Document, notes receivable from franchisees consist of non-interest promissory notes related to initial franchise fees and account sales fees. These notes are paid off in monthly installments.
Specifically, the payment terms for these notes receivable range from 12 to 20 months. Buildingstars withholds the monthly payment directly from the franchisee's monthly contract revenue. This means that instead of the franchisee making a separate payment, Buildingstars deducts the amount due from the revenue earned by the franchisee under their customer contracts.
The document also mentions that the allowance for credit losses related to these notes receivable is not significant. This suggests that Buildingstars does not anticipate substantial losses from franchisees defaulting on these payments. For a prospective franchisee, this indicates that Buildingstars has a system in place to manage and collect these payments efficiently, reducing the risk of non-payment.