What are the Buildingstars restrictions on the franchisee's business location (Item 12) and how does this relate to the franchisee's obligations regarding non-competition (Item 9)?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
FRANCHISEE shall not, during the term of this Agreement, or after the Transfer, termination or expiration, communicate or divulge to anyone, any information or knowledge concerning the products, services, standards, procedures, techniques, sales information, profit margins, marketing procedures, expansion plans, Customers, rates, fees and terms, databases, or such other information that gives BUILDINGSTARS' Affiliate, BUILDINGSTARS and FRANCHISEE a competitive advantage over those who do not know it, and other information or material which BUILDINGSTARS may designate as confidential, nor shall FRANCHISEE disclose or divulge in whole or in part any trade secrets or operating procedures of BUILDINGSTARS or its Affiliates, Customer lists, Customer contracts, sales and promotional information, employee lists, supplier and vendor information, information regarding real property management companies or commercial real estate owners affiliated with or related to any Customer, customer account, or any commercial real estate for which BUILDINGSTARS, its Affiliates, FRANCHISEE or any other franchisee has provided commercial cleaning services; pricing information; financial information furnished or disclosed to FRANCHISEE by BUILDINGSTARS or its Affiliates and any other information with respect to BUILDINGSTARS, unless such information is generally known and in the public domain, and except to the extent necessary to operate the Business ("Confidential Information"). FRANCHISEE will exercise the highest degree of diligence and make every effort to maintain the absolute confidentiality of all trade secrets and proprietary rights during and after the term of this Agreement and will endeavor to insure that its employees will also comply.
X. NON-COMPETITION AND NON-SOLICITATION
A. Non-Competition. During the term of this Agreement and for a period of two (2) years after the expiration, Transfer or termination of this Agreement for any reason, FRANCHISEE will not directly or indirectly, by itself or through corporations, partnerships, trusts, associations, joint ventures, limited liability companies, or other entities or otherwise perform any services for, engage in or acquire, be an employee of, have any financial interest in, loan money to, or have any interest based on profits or revenues of, any cleaning service business or janitorial business within the Area or within any 10 mile area where BUILDINGSTARS or any Affiliate, franchisee or licensee of BUILDINGSTARS is operating.
What This Means (2025 FDD)
Based on the 2025 Buildingstars Franchise Disclosure Document, there are restrictions regarding non-competition. During the term of the Franchise Agreement and for two years after its expiration, transfer, or termination, the franchisee is restricted from engaging in any cleaning or janitorial business within their designated area or within a 10-mile radius of any location where Buildingstars, its affiliates, franchisees, or licensees operate. This restriction applies whether the franchisee acts directly or indirectly through other entities.
This non-competition clause is designed to protect Buildingstars' market share and brand reputation by preventing franchisees from using the knowledge and experience gained during their franchise term to compete against the system, or other franchisees, after they leave the system. The geographic scope of the restriction ensures that former franchisees cannot easily set up a competing business in close proximity to existing Buildingstars operations.
Item 22 of the Buildingstars FDD also addresses trade secrets and confidential information. Franchisees must maintain the confidentiality of a wide array of information, including products, services, standards, techniques, sales information, profit margins, marketing procedures, expansion plans, customer data, rates, fees, databases, and any other information Buildingstars designates as confidential. This obligation extends both during and after the term of the Franchise Agreement. The franchisee must also ensure their employees comply with these confidentiality requirements. This is in addition to the non-compete agreement, which focuses on preventing direct competition, while the confidentiality clause prevents the misuse of sensitive business information.
While the excerpts discuss non-competition and confidentiality, they do not specify the exact criteria used to determine a franchisee's business location. For more information, a prospective franchisee should ask Buildingstars about the specific process for determining the territory and what factors are considered to avoid conflicts with other franchisees.