What are the Buildingstars franchisee's obligations regarding renewal (Item 9) and how does this relate to post-termination obligations (Item 17)?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 22: CONTRACTS]
V. TERM
The term of this Agreement shall be for a period of one (1) year from the date of final execution, unless sooner terminated in accordance with this Agreement. If FRANCHISEE is in full compliance with the terms of this Agreement, FRANCHISEE shall have the right to renew for three (3) additional terms of one (1) year each, provided that FRANCHISEE is not in default under this Agreement at the time of each renewal and FRANCHISEE executes the most current franchise agreement being utilized by BUILDINGSTARS and pays BUILDINGSTARS a renewal fee of $200. Notwithstanding the foregoing, BUILDINGSTARS may, in its discretion, refuse to renew the Franchise if FRANCHISEE has been notified of defaults (even if subsequently cured) under the Franchise Agreement more than two (2) times during the initial term or more than three (3) times during any renewal term, even if FRANCHISEE is not in default at the time of such renewal. The then current franchise agreement may contain significantly different terms than this Agreement. On renewal, BUILDINGSTARS is under no obligation to provide FRANCHISEE with any new customer accounts. FRANCHISEE agrees to give BUILDINGSTARS not less than one hundred twenty (120) days written notice of its desire to renew the franchise, prior to the end of the initial term or the renewal term. In the event that BUILDINGSTARS elects not to renew, BUILDINGSTARS shall give FRANCHISEE written notice within ninety (90) days prior to the expiration of this Agreement.
Notwithstanding anything herein to the contrary, in the event that a new franchise agreement is not executed by both parties at the expiration of this Agreement or any renewal term and BUILDINGSTARS has not given FRANCHISEE notice of its intent not to renew, this Agreement shall continue in accordance with its terms on a month-to-month basis with either party having the right to terminate on thirty (30) days prior written notice to the other party.
VI. OBLIGATIONS OF BUILDINGSTARS
- A.
Initial Training.
BUILDINGSTARS will provide an initial training program for the operation of the Business using the System and Marks for the FRANCHISEE.
The initial training program is furnished after this Agreement is executed and prior to the opening of the Business and will be furnished at such time and place as BUILDINGSTARS may designate.
[Item 23: RECEIPT]
C. Consequences of Termination. Upon termination or expiration of this Agreement, for any reason whatsoever, all of FRANCHISEE'S rights hereunder shall terminate. FRANCHISEE shall immediately thereafter discontinue use of all Marks, signs, colors, structures, printed goods and forms of advertising indicative of BUILDINGSTARS' business and return any copyrighted materials which have been provided to FRANCHISEE by BUILDINGSTARS, and if BUILDINGSTARS requests, shall assign its telephone numbers to BUILDINGSTARS and execute any and all documents necessary to do so. Further, FRANCHISEE shall pay all amounts due to BUILDINGSTARS, BUILDINGSTARS' Affiliates, and suppliers. Further, FRANCHISEE agrees to return any and all materials which contain Confidential Information in whatever form, including but not limited to the Confidential Operation Manual, to BUILDINGSTARS immediately. FRANCHISEE'S obligations regarding Trade Secrets and Confidential Information and Restrictive Covenant shall remain in full force and effect in accordance with their terms, notwithstanding such termination.
FRANCHISEE will immediately cease providing services to all Customers and forfeit any rights it may have to the Customers and any customer accounts. Upon request of BUILDINGSTARS, FRANCHISEE will assign to BUILDINGSTARS any or all of FRANCHISEE'S Customer contracts and BUILDINGSTARS will have the right to either service the accounts or assign the servicing of the accounts to others. At no such time will FRANCHISEE terminate a written contract until proper notice has been given to BUILDINGSTARS prior to termination.
What This Means (2025 FDD)
According to the 2025 Buildingstars Franchise Disclosure Document, a franchisee's ability to renew their franchise agreement depends on their compliance with the agreement's terms. The initial term of the agreement varies, with examples provided of one, three, and five-year terms. To renew, the franchisee must not be in default at the time of renewal, must execute the most current franchise agreement, and must pay a renewal fee, which varies depending on the initial term length ($200, $1,000, or $2,000). The franchisee must provide Buildingstars with written notice of their intent to renew at least 120 days before the end of the current term. However, Buildingstars retains the discretion to refuse renewal if the franchisee has received default notices more than twice during the initial term or more than three times during any renewal term, even if these defaults were subsequently corrected. Buildingstars must notify the franchisee of its decision not to renew within 90 days prior to the agreement's expiration. If a new agreement isn't executed and Buildingstars doesn't provide notice of non-renewal, the agreement continues on a month-to-month basis, terminable by either party with 30 days' notice.
Upon termination or expiration of the Buildingstars franchise agreement, the franchisee's rights under the agreement cease immediately. The franchisee must stop using all Buildingstars' marks, signs, advertising materials, and return any copyrighted materials, including the Confidential Operation Manual. If requested, the franchisee must assign telephone numbers to Buildingstars and execute necessary documents. All outstanding payments to Buildingstars, its affiliates, and suppliers must be paid.
Furthermore, the franchisee's obligations regarding trade secrets, confidential information, non-solicitation, and non-competition remain in effect even after termination. The franchisee must immediately stop providing services to customers and forfeits rights to customer accounts. Buildingstars can request the assignment of customer contracts, allowing Buildingstars to service the accounts directly or assign them to others. The franchisee cannot terminate any written contract without providing proper notice to Buildingstars beforehand. These post-termination obligations ensure the protection of Buildingstars' brand, confidential information, and customer relationships, even after the franchise agreement ends.