Is interest charged on the Buildingstars Promissory Note for the Account Sales Fee?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
BUILDINGSTARS or if FRANCHISEE is willing to accept a new customer account from BUILDINGSTARS, FRANCHISEE must pay BUILDINGSTARS an Account Sales Fee of four hundred percent (400%) of the Monthly Contract Revenue which is generated from the new customer account. The Account Sales Fee is payable in full even if FRANCHISEE loses the new customer account for any reason, however, BUILDINGSTARS will replace the lost new customer account only under the terms and conditions set forth in Section VI.J. below.
The Account Sales Fee is payable in cash or in the following manner:
- FRANCHISEE may request new customer accounts in increments of $1,000 of Monthly Contract Revenue. At such time as FRANCHISEE submits said request, FRANCHISEE shall pay BUILDINGSTARS $200 per $1,000 Monthly Contract Revenue it requested. This will serve as the
first monthly payment under the Promissory Note that finances the Account Sales Fee. The amount of the Promissory Note will be 400% of the Monthly Contract Revenue. The Promissory Note will be payable without interest in 20 equal monthly installments. For example, if FRANCHISEE requests new customer accounts which would generate $2,000 in Monthly Contract Revenue, it would pay $400 (1/20 of $2,000 x 400%) ("Monthly Payment") and sign a Promissory Note guaranteed by the Guarantors under this Agreement which will contain substantially the same terms and conditions as set forth in Exhibit III attached hereto. The second monthly payment will be due after the first full month FRANCHISEE has provided service to said new customer account. BUILDINGSTARS may withhold the monthly Promissory Note payments from the amount of billings BUILDINGSTARS collects for the FRANCHISEE, as more fully described in Section VI.D below. A default under the Promissory Note shall also be deemed a default under this Agreement.
- BUILDINGSTARS may, but is not required to, offer FRANCHISEE new customer accounts. If FRANCHISEE decides to accept the new customer account, which decision is solely within the FRANCHISEE'S discretion, FRANCHISEE must either pay the Account Sales Fee in cash or execute a Promissory Note guaranteed by the Guarantors under this Agreement substantially in the form set forth in Exhibit III for the amou
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars' 2025 Franchise Disclosure Document, the Promissory Note used to finance the Account Sales Fee is payable without interest. This applies whether the franchisee requests new customer accounts or Buildingstars offers new customer accounts to the franchisee. The Promissory Note allows franchisees to pay the Account Sales Fee over time rather than in a lump sum.
Specifically, if a Buildingstars franchisee requests new customer accounts, the amount of the Promissory Note will be either 200% or 400% of the Monthly Contract Revenue, depending on which section of the FDD is referenced. The note is payable in 20 equal monthly installments in one instance and 18 monthly installments in another, without interest. The first payment is due after the first full month the franchisee provides service to the new customer account. Buildingstars may withhold these payments from the billings it collects on behalf of the franchisee.
If Buildingstars offers a new customer account to a franchisee, and the franchisee accepts, they can either pay the Account Sales Fee in cash or execute a Promissory Note. This note is also payable without interest, in either 20 or 18 monthly installments, with the first installment due after the first full month of service. Defaulting on the Promissory Note is considered a default under the Franchise Agreement, which could lead to termination of the franchise.