Can Buildingstars reduce the scope of the restrictive covenants without the franchisee's consent?

According to Buildingstars's 2025 Franchise Disclosure Document, Buildingstars has the right to reduce the scope of any restrictive covenant contained in Sections IX and X of the franchise agreement without the franchisee's consent. This reduction becomes effective immediately upon the franchisee receiving written notice from Buildingstars. The franchisee is then obligated to comply with the covenant as modified.

This provision gives Buildingstars significant flexibility to adjust the restrictive covenants, which typically include non-compete and non-solicitation clauses. These clauses limit a franchisee's ability to operate a competing business or solicit Buildingstars' customers and service providers, both during the franchise term and for a period after the agreement ends. The FDD states that Buildingstars intends to restrict franchisee activities only to the extent necessary to protect its legitimate business interests.

For a prospective franchisee, this means that the specific restrictions they initially agree to may change during the term of the agreement. While Buildingstars is expected to act reasonably, the franchisee has limited recourse to challenge these changes. It is important for potential franchisees to carefully consider the scope of the restrictive covenants and understand that Buildingstars can modify them. Franchisees should seek legal counsel to fully understand the implications of these clauses and the potential impact on their business operations and future opportunities.

It is also worth noting that the enforceability of restrictive covenants can vary by jurisdiction, and courts may modify or invalidate overly broad restrictions. However, the Buildingstars agreement explicitly states that in the event a court finds any limitations illegal, invalid, or unenforceable, the court should reduce the limitation to render it enforceable. This, coupled with Buildingstars's right to unilaterally reduce the scope of the covenants, suggests a proactive approach to ensuring the enforceability of these restrictions.