What happens if a Buildingstars franchisee defaults on the Promissory Note?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
A copy of the Promissory Note is attached to each Program's Franchise Agreement: Exhibit I of the Technician Franchise Agreement, Exhibit II of the On-Site Manager Franchise Agreement and Exhibit III of the Corporate Franchise Agreement. Upon default, you will be obligated to pay the entire amount due under the Promissory Note along with court costs and attorneys' fees for collection and termination of the franchise or other cross default clauses. A default under the Promissory Note shall also be deemed a default under the Franchise Agreement. Your owners and their spouses will be required to sign a personal guarantee of the Promissory Notes.
Source: Item 10 — FINANCING (FDD page 20)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, if a franchisee defaults on their Promissory Note, they will be required to pay the entire outstanding balance. Additionally, the franchisee will be responsible for covering court costs and attorneys' fees associated with the collection efforts and the termination of the franchise agreement. The FDD specifies that this also applies to other cross-default clauses.
Furthermore, the document states that a default on the Promissory Note is considered a default under the Franchise Agreement itself. This means that Buildingstars can pursue remedies as if the franchisee breached the Franchise Agreement directly. This interconnectedness of the Promissory Note and Franchise Agreement underscores the importance of meeting the financial obligations outlined in the note.
Finally, the FDD indicates that the owners of the franchise and their spouses must provide a personal guarantee for the Promissory Notes. This implies that in the event of a default, Buildingstars can seek recourse not only from the franchise's assets but also from the personal assets of the owners and their spouses, adding another layer of financial responsibility and risk for the franchisee.