Can Buildingstars immediately terminate the franchise if the franchisee declares bankruptcy?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
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) failing to generate the Minimum Revenue Requirement in any month; or (g) any other act or omission which permits termination without notice and/or an opportunity to cure under applicable state law.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, Buildingstars has the right to terminate the franchise agreement immediately if the franchisee declares bankruptcy or becomes insolvent, provided that state law permits such immediate termination. This means that Buildingstars is not obligated to provide a notice period or an opportunity to cure the default if the franchisee's bankruptcy triggers the termination, but this is contingent on state laws allowing it.
This immediate termination clause is a significant point for prospective franchisees. Bankruptcy can arise from various financial difficulties, and this clause means a franchisee could lose their Buildingstars franchise without any chance to recover if they enter bankruptcy. The FDD specifies that Buildingstars may terminate the franchise immediately if state law permits.
It is important for a potential Buildingstars franchisee to understand the specific laws in their state regarding franchise terminations due to bankruptcy. They should seek legal counsel to determine their rights and obligations in such a situation. Furthermore, the franchisee should evaluate their financial stability and risk tolerance before entering into a franchise agreement with Buildingstars, considering the potential for immediate termination in case of bankruptcy.