What are the Buildingstars franchisee's obligations regarding insurance (Item 9) and how does this relate to potential litigation (Item 3)?
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.
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, including information on claims and losses. The insurance policies must name Buildingstars and its affiliates as additional insureds; however, the franchisee is responsible for paying the premiums and any deductible amounts. Buildingstars retains the right to increase the required types and amounts of insurance coverage at its discretion. Buildingstars may also offer insurance coverage to franchisees, requiring them to pay an Insurance Program Fee if they choose to participate. If a franchisee fails to maintain adequate insurance, Buildingstars has the option to obtain insurance on the franchisee's behalf, with the franchisee responsible for reimbursing Buildingstars for the costs. Additionally, Buildingstars may charge the franchisee $100 for the first day and $25 for each subsequent day the franchisee lacks the minimum required insurance. The franchisee remains responsible for maintaining adequate insurance coverage at all times, even after the agreement expires, and failure to do so does not relieve them of their contractual obligations or liabilities. Buildingstars makes no representation that the required insurance coverage is sufficient for the franchisee's needs, advising franchisees to consult their own insurance agents.
Regarding potential litigation, Buildingstars is not obligated to hire attorneys or commence litigation to enforce payment of accounts by customers. The franchisee is responsible for all reasonable attorneys' fees, court costs, and out-of-pocket costs incurred to collect from customers. Buildingstars's collection activities are limited to ongoing phone contact and reminder notices to delinquent customers. Buildingstars can deduct from payments collected from customers any amounts due to Buildingstars, authorized insurance payments, and any out-of-pocket costs, including attorney's fees and court costs, incurred by Buildingstars in enforcing payment of accounts by customers, franchisees, or their guarantors.
In essence, Buildingstars franchisees bear the primary responsibility for maintaining adequate insurance coverage and for the costs associated with collecting payments from customers, including potential legal fees. The insurance requirements protect Buildingstars from potential liabilities arising from the franchisee's operations, while the collection policies place the onus on the franchisee to manage customer accounts and any related legal actions. Prospective franchisees should carefully consider these obligations and consult with legal and insurance professionals to fully understand their responsibilities and potential financial risks.