Who is responsible for collection activities if a Buildingstars customer is delinquent in payment?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
- D. Management Services BUILDINGSTARS will provide FRANCHISEE with billing and collection services on its behalf. However, BUILDINGSTARS is not responsible if the Customer fails to pay nor is BUILDINGSTARS required to commence any further action other than as set forth herein if they do not pay. FRANCHISEE is responsible for any and all collection activities if a Customer is delinquent in payment.
- a. Authorization to BUILDINGSTARS. FRANCHISEE hereby authorizes BUILDINGSTARS to bill each Customer on a scheduled basis, accept payments from customer accounts, collect accounts receivable, and maintain revenue records. BUILDINGSTARS will provide Customer imprinted invoices, envelopes and postage. In addition, BUILDINGSTARS will provide ongoing phone contact and reminder notices, both mailed and faxed to delinquent Customers on a monthly basis. Once a month BUILDINGSTARS will provide FRANCHISEE a Monthly Revenue Statement. FRANCHISEE hereby authorizes BUILDINGSTARS to collect cash and other forms of payment from accounts to which FRANCHISEE has rendered services or products, endorse FRANCHISEE'S name on and deposit checks, sign its name on liens, and take any other action necessary to carry out the terms of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars' 2025 Franchise Disclosure Document, the franchisee is responsible for collection activities if a customer is delinquent in payment. While Buildingstars provides billing and collection services, their responsibility is limited. Buildingstars will bill customers, accept payments, collect receivables, maintain records, provide invoices, envelopes, and postage, and send monthly phone contact and reminder notices via mail and fax to delinquent customers. However, Buildingstars is not obligated to hire attorneys or commence litigation to enforce payment.
This means that if a customer fails to pay, the Buildingstars franchisee must take the necessary steps to recover the outstanding amount. This could include more aggressive collection efforts beyond the standard reminders sent by Buildingstars, such as direct communication, payment plans, or, if necessary, legal action pursued by the franchisee. The franchisee is also responsible for covering all associated costs, including attorney's fees and court costs, incurred during the collection process.
This arrangement places the onus of debt collection on the franchisee, which can be a significant responsibility. Franchisees should factor in the potential time and expense associated with pursuing delinquent accounts when evaluating the Buildingstars franchise opportunity. It is important to have a plan in place for managing collections and to understand the legal options available for recovering unpaid debts.