If a Buildingstars franchisee is convicted of a felony, can the franchise be terminated immediately?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Without Opportunity to Cure. Notwithstanding anything contained herein to the contrary, if state law permits, BUILDINGSTARS shall be permitted to terminate the franchise immediately upon notice when the basis or grounds for cancellation is: (a) FRANCHISEE or its owners are convicted of a felony or any other criminal misconduct which materially and adversely affects the operation, maintenance, reputation, or goodwill of the franchise; (b) fraudulent activity which materially and adversely affects the operation, maintenance, reputation, or goodwill of the franchise; (c) abandonment of the franchise; (d) bankruptcy or insolvency of the FRANCHISEE; (e) the giving of more than two (2) no account or insufficient funds checks within a twelve-month period; or (f) any other act or omission which permits termination without notice and/or an opportunity to cure under applicable state law.
Source: Item 23 — RECEIPT (FDD pages 43–217)
What This Means (2025 FDD)
According to Buildingstars' 2025 Franchise Disclosure Document, Buildingstars has the right to terminate a franchise agreement immediately if the franchisee or its owners are convicted of a felony. However, this is contingent on state law permitting such immediate termination. The felony must also materially and adversely affect the operation, maintenance, reputation, or goodwill of the Buildingstars franchise.
This immediate termination clause means that a Buildingstars franchisee faces significant risk if they, or any owner of their franchise, are convicted of a felony. Buildingstars does not need to provide an opportunity to cure the issue; they can terminate the agreement as soon as they provide notice, provided that it is allowed by the state law. This could result in a sudden loss of income and the Buildingstars business.
It is important to note that the felony conviction must have a material and adverse effect on the Buildingstars franchise's operations, maintenance, reputation, or goodwill. This implies that not all felony convictions will automatically lead to termination; Buildingstars must demonstrate a tangible negative impact. However, the determination of what constitutes a material and adverse effect is ultimately at Buildingstars' discretion, potentially creating ambiguity for the franchisee.
Many franchise agreements contain clauses allowing for termination upon a felony conviction, as it is seen as a risk to the brand's reputation and customer trust. Prospective Buildingstars franchisees should carefully consider this clause and understand the potential consequences of a felony conviction, and also seek legal counsel to understand how state law affects this provision.