What interest rate will Buildingstars charge on underreported gross sales?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
- I.
Right to Audit.
BUILDINGSTARS may, from time to time, cause one or more complete audits to be made of the affairs and records relating to the operations of the Business.
Upon request by BUILDINGSTARS, FRANCHISEE shall make such books, records and information available to BUILDINGSTARS or its designated representative at all reasonable times for review and audit by BUILDINGSTARS at FRANCHISEE'S place of business.
If it is found that FRANCHISEE underreported Gross Sales, FRANCHISEE will reimburse BUILDINGSTARS for the amount of the Account Sales Fees, Administration Fees, Royalty Fees, and Insurance Program Fees, if applicable, that would have been billed had billings been reported accurately, plus interest on those amounts at the rate of the lesser of one and one-half percent (1-1/2%) per month or the maximum legal rate in the jurisdiction where the Business is located.
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 a franchisee is found to have underreported gross sales, they will be required to reimburse Buildingstars for the underpaid amounts of Account Sales Fees, Administration Fees, Royalty Fees, and Insurance Program Fees, if applicable.
In addition to reimbursing the underpaid fees, Buildingstars will charge interest on those amounts. The interest rate will be the lesser of one and one-half percent (1.5%) per month or the maximum legal rate in the jurisdiction where the Buildingstars business is located. This means that the franchisee will pay either 1.5% per month, which is 18% annually, or whatever the legal maximum interest rate is in their state, whichever is lower.
Furthermore, if an audit reveals that the underpayment of these fees exceeds two percent (2%), the franchisee is responsible for covering all costs and expenses Buildingstars incurs while conducting a subsequent audit to verify accurate reporting. These costs include salaries of Buildingstars' representatives, travel expenses, room and board, and audit fees. This policy incentivizes accurate reporting and ensures Buildingstars is compensated for the costs associated with uncovering and rectifying underreported sales.