How much must a Buildingstars franchisee pay upfront for every $1,000 of Monthly Contract Revenue requested?
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
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars' 2025 Franchise Disclosure Document, a franchisee must pay $200 upfront for every $1,000 of Monthly Contract Revenue requested. This initial payment serves as the first monthly installment on a Promissory Note used to finance the Account Sales Fee.
The Account Sales Fee itself is 400% of the Monthly Contract Revenue. The franchisee finances this fee through a Promissory Note, payable without interest over 20 equal monthly installments. Buildingstars may deduct these monthly payments from the franchisee's billings.
For example, if a franchisee requests new customer accounts that would generate $2,000 in Monthly Contract Revenue, they would pay $400 upfront (which is 1/20 of $2,000 multiplied by 400%). The franchisee would then sign a Promissory Note for the remaining balance. This note is guaranteed by the franchisee's guarantors and contains terms substantially similar to those in Exhibit III of the Franchise Agreement.
It's important to note that a default on the Promissory Note is considered a default under the Franchise Agreement. This arrangement allows franchisees to acquire new customer accounts without paying the entire Account Sales Fee upfront, but it also creates a financial obligation that must be carefully managed to avoid default.