For how long after the termination, expiration, or transfer of the Buildingstars agreement does the Customer Development Fee obligation apply if the franchisee performs similar services outside the agreement?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
G. Customer Development Fee. If during the term of this Agreement and within one year after termination, expiration or transfer of this Agreement, FRANCHISEE or any employee or affiliate of FRANCHISEE shall perform for any Customer services similar to those to be performed under this Agreement but performed outside of this Agreement, FRANCHISEE shall pay to BUILDINGSTARS a fee equal to 3 times the monthly amount agreed to be paid to FRANCHISEE, its employee or affiliate of FRANCHISEE, for such services.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, a franchisee may be subject to a Customer Development Fee even after the franchise agreement ends. Specifically, if the franchisee, or any employee or affiliate of the franchisee, performs services similar to those under the Buildingstars agreement for any customer, but does so outside the agreement, the franchisee must pay Buildingstars a fee.
This obligation extends for one year following the termination, expiration, or transfer of the Buildingstars agreement. The fee is calculated as three times the monthly amount agreed to be paid to the franchisee, their employee, or affiliate for such services.
This provision means that a former Buildingstars franchisee cannot immediately start a competing business and service Buildingstars customers without potentially incurring significant fees. This could impact the franchisee's ability to earn income after leaving the franchise system and should be carefully considered before signing the franchise agreement.