What out-of-pocket costs can Buildingstars deduct from payments collected from customers?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
FRANCHISEE further authorizes BUILDINGSTARS to deduct from payments BUILDINGSTARS collects from the Customers the fees described in Sections III and IV of this Agreement and any other amounts due to BUILDINGSTARS, any authorized insurance payments, and any out-of-pocket costs (including but not limited to attorney's fees and court costs) incurred by BUILDINGSTARS in enforcing payment of accounts by Customers, FRANCHISEE or FRANCHISEE'S guarantors. BUILDINGSTARS will collect all payments actually received and disburse the amount due to FRANCHISEE in accordance with the procedures set forth in the Confidential Operations Manual.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars' 2025 Franchise Disclosure Document, Buildingstars is authorized to deduct specific out-of-pocket costs from the payments they collect from customers on behalf of the franchisee. These costs are those incurred by Buildingstars when enforcing payment of accounts from customers, franchisees, or the franchisee's guarantors. These out-of-pocket costs include, but are not limited to, attorney's fees and court costs.
This means that if a Buildingstars franchisee's customer is late on payments, and Buildingstars has to take legal action to recover the funds, the franchisee will ultimately be responsible for covering those legal expenses. Buildingstars will deduct these costs directly from the payments collected from other customers before disbursing the remaining amount to the franchisee.
It is important for a prospective Buildingstars franchisee to understand that while Buildingstars handles the billing and collection services, the franchisee bears the financial risk associated with delinquent customer accounts. The franchisee is responsible for all reasonable attorney's fees, court costs, expenses, and out-of-pocket costs incurred to enforce collection from Customers. This arrangement could impact the franchisee's profitability, especially if they operate in an area with a higher risk of payment defaults or if Buildingstars pursues aggressive legal action for collections.