Can officers of Buildingstars be held individually liable for their dealings with the franchisee?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
In all of their dealings with FRANCHISEE, the officers, directors, employees and agents of BUILDINGSTARS act only in their representative capacity for BUILDINGSTARS, and not in any individual capacity.
FRANCHISEE understands that if it fails to comply with the insurance program requirements, the FRANCHISEE and anyone performing such services may not be insured and that FRANCHISEE may be personally liable for any claims made by such persons. IT IS FRANCHISEE'S SOLE RESPONSIBILITY TO COMPLY WITH THE TERMS OF THE INSURANCE PROGRAM AND BUILDINGSTARS ASSUMES NO RESPONSIBILITY FOR FRANCHISEE'S VIOLATION OF THE TERMS OF THE INSURANCE PROGRAM. FRANCHISEE AGREES TO INDEMNIFY AND HOLD BUILDINGSTARS HARMLESS FROM ANY CLAIMS, DEMANDS, ACTIONS, OR CAUSES OF ACTION, INCLUDING ATTORNEY'S FEES, THAT ARISE DUE TO FRANCHISEE'S FAILURE TO COMPLY WITH THE INSURANCE PROGRAM REQUIREMENTS, AS THEY MAY BE MODIFIED FROM TIME TO TIME.
Source: Item 23 — RECEIPT (FDD pages 43–217)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, the officers, directors, employees, and agents of Buildingstars act only in their representative capacity for Buildingstars in all of their dealings with the franchisee, and not in any individual capacity. This suggests that Buildingstars' officers are generally not individually liable for their actions when acting on behalf of the company.
However, it's important to note that this protection may not be absolute. There could be exceptions, such as instances of gross negligence, intentional misconduct, or actions taken outside the scope of their representative capacity. Franchisees should be aware of the conditions under which this protection applies and the potential circumstances that could lead to individual liability.
Furthermore, franchisees agree to indemnify and hold Buildingstars harmless from any claims, demands, actions, or causes of action, including attorney's fees, that arise due to the franchisee's failure to comply with the insurance program requirements. This means that franchisees may be responsible for covering Buildingstars' losses, including those potentially involving officers, if the losses stem from the franchisee's non-compliance with insurance terms. This highlights the importance of adhering to the insurance requirements outlined in the franchise agreement.
Prospective franchisees should seek legal counsel to fully understand the implications of these provisions and the extent to which Buildingstars' officers are shielded from individual liability. It is also important to understand the specific conditions under which a franchisee might be required to indemnify Buildingstars and its officers.