What are the Buildingstars franchisee's obligations regarding insurance coverage (Item 9) and how does this relate to potential bankruptcy (Item 4)?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
equired 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
reimburse BUILDINGSTARS for the costs of obtaining said insurance. In addition, BUILDINGSTARS may charge FRANCHISEE $100 for the first day and $25 a day for each additional day FRANCHISEE does not have at least the minimum amount of insurance BUILDINGSTARS requires. Regardless of the insurance amounts BUILDINGSTARS requires, it shall be the responsibility of FRANCHISEE to maintain adequate insurance coverage at all times during the term of and after the expiration of this Agreement. Failure of FRANCHISEE to maintain coverage shall not relieve it of any contractual responsibility or obligation or liability under this Agreement.
- F. Cooperation for Financial Performance Representations. FRANCHISEE shall maintain its books and records in accordance with generally accepted accounting principles, consistently applied. If BUILDINGSTARS at any time desires to utilize a financial performance representation or similar document in connection with the sale of franchises, FRANCHISEE agrees to provide BUILDINGSTARS, at no cost, with such reasonable information as BUILDINGSTARS requires from FRANCHISEE in order to properly prepare such documents, and shall permit BUILDINGSTARS to utilize such information as it deems necessary.
- G. Innovations.
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, franchisees must purchase and maintain the minimum insurance coverages that Buildingstars requires throughout the term of the agreement. Franchisees must provide Buildingstars with evidence of this insurance and information about any claims or losses. These insurance policies must name Buildingstars and its affiliates as additional insureds, though Buildingstars is not obligated to pay premiums or deductibles. Buildingstars can also require franchisees to increase their insurance coverage amounts at its discretion. Buildingstars advises franchisees to consult with their own insurance agents to determine if the required coverage is adequate for their needs, as Buildingstars does not guarantee its sufficiency. Buildingstars may also offer insurance coverage to franchisees, potentially requiring an Insurance Program Fee as detailed in Section IV.E.
If a Buildingstars franchisee fails to maintain adequate insurance, Buildingstars has the option to obtain insurance on the franchisee's behalf, with the franchisee responsible for reimbursing the costs. Additionally, Buildingstars may charge a penalty of $100 for the first day of non-compliance and $25 for each subsequent day until the minimum insurance requirement is met. The franchisee remains responsible for maintaining adequate insurance coverage throughout the term of the agreement, and failure to do so does not relieve them of their contractual obligations or liabilities.
The FDD also mentions the impact of a customer's bankruptcy on the franchisee. If a Buildingstars customer ceases business or becomes insolvent or bankrupt within the first six months of service, Buildingstars will offer the franchisee a new customer account or increase an existing one with equivalent Monthly Contract Revenue. However, the franchisee is not entitled to a refund or reduction in Account Sales Fees already paid and must continue paying any outstanding Account Sales Fee according to the Promissory Note. This clause protects the franchisee from revenue loss due to customer bankruptcy, but it does not alleviate their financial obligations to Buildingstars.