If an audit by Buildingstars determines that fees are underpaid by more than 2%, what additional costs must the franchisee pay?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition, in the event that an audit by BUILDINGSTARS results in a determination that any or all of the Account Sales Fee, Administration Fees, Royalty Fees and Insurance Program Fees, if applicable, paid to BUILDINGSTARS are deficient (underpaid) by more than two percent (2%), the FRANCHISEE shall promptly pay to BUILDINGSTARS any amounts shown to be due and all costs and expenses incurred by BUILDINGSTARS in conducting the subsequent audit to determine that the FRANCHISEE is reporting correctly (not the audit which disclosed the original deficiency), including salaries of BUILDINGSTARS' representatives, travel costs, room and board and audit fees.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars' 2025 Franchise Disclosure Document, if an audit reveals that a franchisee has underpaid Account Sales Fees, Administration Fees, Royalty Fees, and Insurance Program Fees (if applicable) or Management Fees by more than 2%, the franchisee is responsible for covering specific costs.
Specifically, the franchisee must promptly pay Buildingstars the deficient amounts that were initially underpaid. Additionally, the franchisee is obligated to cover all costs and expenses incurred by Buildingstars in conducting a subsequent audit. This subsequent audit is to verify that the franchisee is accurately reporting their financial information and adhering to the franchise agreement terms.
The costs the franchisee must reimburse to Buildingstars include salaries for Buildingstars' representatives involved in the audit, their travel costs, the expenses for their room and board, and the audit fees themselves. This means that underreporting, even unintentionally, can lead to significant additional expenses for the franchisee beyond simply correcting the underpayment.