What are the Buildingstars restrictions on the franchisee's business location (Item 12) and how does this relate to the franchisee's obligations regarding renewal (Item 9)?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
notifying any Customer of FRANCHISEE'S new affiliation or employment;
- b. Contact or solicit, attempt to contact or solicit, or participate or aid in the contact or solicitation of, any Service Provider for the purpose of inducing or encouraging him, her or it to terminate or materially alter their employment, engagement, franchise relationship or other business relationship with BUILDINGSTARS, any Affiliate, or other franchisee;
- c. Do or take any action to circumvent or otherwise attempt to take away or interfere with or jeopardize the business relationship between the Customer and BUILDINGSTARS. FRANCHISEE acknowledges and agrees any interference with the Customer's business or the relationship between BUILDINGSTARS and Customers is in direct violation of this provision.
- C. Reasonableness of Restrictions. BUILDINGSTARS intends to restrict the activities of the FRANCHISEE under Sections IX and X of this Agreement only to the extent necessary for the protection of BUILDINGSTARS' legitimate business interests. For the sake of clarity, nothing herein is to restrict FRANCHISEE from providing janitorial/cleaning services to any entity or person that is not a Customer; provided however, that the foregoing shall not alter FRANCHISEE's obligations, including but not limited to Section IX above, under this Agreement. The foregoing covenants shall be construed as severable and independent and shall be interpreted and applied consistent with the requirements of reasonableness and equity. In the event a court of competent jurisdiction shall determine the business, time, or geographic limitations contained in this Agreement are illegal, invalid or unenforceable, then, the
court so holding shall reduce the limitation necessary to render such restriction enforceable by such court. BUILDINGSTARS shall have the right to reduce the scope of any covenant contained in Sections IX and X, without FRANCHISEE'S consent, effective immediately upon receipt by FRANCHISEE of written notice thereof; and FRANCHISEE shall comply with any covenant as so modified. In addition to any other remedies available at law or equity, BUILDINGSTARS shall have the right to injunctive relief for a violation or threatened violation of the foregoing. FRANCHISEE acknowledges that the restrictions imposed in this Section are reasonable and their enforcement will not cause an undue burden upon FRANCHISEE'S ability to earn a livelihood.
The terms of this Section X are assignable by BUILDINGSTARS and shall inure to the benefit of BUILDINGSTARS, as well as its successors and assigns. In the event of any assignment, sale, merger or change in ownership or structure of BUILDINGSTARS, the resulting entity shall step into the place of BUILDINGSTARS, without any additional consent of or notice to FRANCHISEE, as if the term BUILDNGSTARS were defined in this Agreement to include such entity.
XI. DEFAULT AND TERMINATION
A. Termination by BUILDINGSTARS.
-
- 30 Day Opportunity to Cure BUILDINGSTARS may at its option, and without prejudice to any other rights or remedies provided for in this Agreement or at law or in equity, terminate this Agreement for "good cause". (Provided that state law permits BUILDINGSTARS to terminate earlier if the "good cause" constitutes a default which is not curable). Without limitation as to other situations, good cause for termination also exists if FRANCHISEE or any guarantor of this Agreement:
- (1) Does not perform any and all of the lawful terms, conditions, and obligations of this Agreement, or the Confidential Operations Manual; or
- (2) Commits any other act which constitutes good cause under applicable state law or court decisions; or
- (3) Engages in any illegal, fraudulent, unfair or deceptive business practice, which, in the opinion of BUILDINGSTARS, adversely affects the operation, maintenance, or goodwill of the franchise; or
- (4) Fails to operate the Business for a period of three (3) consecutive days without justifiable cause; or
- (5) Diverts or collects any fees from Customers in violation of Section VI.D., above which provide that customer billings and collections are to be done by BUILDINGSTARS; or
- (6) Fails to properly service Customers in accordance with BUILDINGSTARS' standards and within the spirit and intent of this Agreement. (By way of illustration and not limitation, a failure to properly service Customers will occur if at least three customer complaints are made regarding the services rendered by the Business within any consecutive ninety day period because of dissatisfaction with services provided by the Business.)
Subject to applicable law and except as otherwise provided in this Agreement, BUILDINGSTARS will give the FRANCHISEE at least ninety (90) days prior written notice of termination, [unless a longer period of time is required or shorter period of time is permitted by applicable state law]. The notice shall state the reason(s) for termination and shall provide that the FRANCHISEE has
thirty (30) days from the date of said notice to correct any claimed deficiency. If the deficiency is corrected within thirty (30) days, the notice shall be void. If the deficiency is not corrected within said thirty (30) day period, BUILDINGSTARS may terminate this Agreement after ninety (90) days from the date of original default notice.
-
- 10 Day Opportunity to Cure BUILDINGSTARS may also terminate this Agreement for nonpayment of sums due to BUILDINGSTARS or BUILDINGSTARS' Affiliates or suppliers; or failure of FRANCHISEE to open the Business in accordance with the time periods specified in this Agreement. If termination is based on the foregoing, the FRANCHISEE shall be entitled to written notice of default, but BUILDINGSTARS shall [if permitted by applicable law] only be required to grant FRANCHISEE ten (10) days to remedy such default. If the deficiency is not corrected within said ten (10) day period, BUILDINGSTARS may terminate this Agreement after ninety (90) days from the original default notice.
-
- Without Opportunity to Cure. Notwithstanding anything contained herein to the contrary, if state law permits, BUILDINGSTARS shall be permitted to terminate the franchise immediately upon notice when the basis or grounds for cancellation is: (a) FRANCHISEE or its owners are convicted of a felony or any other criminal misconduct which materially and adversely affects the operation, maintenance, reputation, or goodwill of the franchise; (b) fraudulent activity which materially and adversely affects the operation, maintenance, reputation, or goodwill of the franchise; (c) abandonment of the franchise; (d) bankruptcy or insolvency of the FRANCHISEE; (e) the giving of more than two (2) no account or insufficient funds checks within a twelve-month period; or (f) any other act or omission which permits termination without notice and/or an opportunity to cure under applicable state law.
- B. Termination by FRANCHISEE. FRANCHISEE must notify BUILDINGSTARS in writing of any failure of BUILDINGSTARS to perform any of BUILDINGSTARS' obligations pursuant to this Agreement.
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, franchisees face certain restrictions aimed at protecting Buildingstars's customer relationships. Specifically, franchisees are prohibited from taking actions that could interfere with or jeopardize the business relationship between Buildingstars and its customers. This restriction is in place to protect Buildingstars's legitimate business interests. However, the agreement clarifies that franchisees are not restricted from providing janitorial/cleaning services to entities or persons who are not Buildingstars customers, as long as it doesn't violate other obligations outlined in the agreement. These restrictions are considered reasonable and are designed to avoid undue burden on the franchisee's ability to earn a livelihood.
Regarding renewal, the FDD states that if a Buildingstars franchisee is in full compliance with the terms of the agreement, they have the right to renew for additional terms, provided they are not in default at the time of renewal, execute the most current franchise agreement, and pay a renewal fee. The renewal fee varies depending on the initial term length. For an initial term of one year, the renewal fee is $200. For a three-year initial term, the renewal fee is $1,000. For a five-year initial term, the renewal fee is $2,000. However, Buildingstars retains the discretion to refuse renewal if the franchisee has received default notices (even if cured) more than two times during the initial term or more than three times during any renewal term.
It's important to note that the terms of the franchise agreement may change upon renewal, and Buildingstars is not obligated to provide franchisees with new customer accounts at the time of renewal. Franchisees must provide Buildingstars with written notice of their intent to renew at least 120 days before the end of the current term. Conversely, Buildingstars must notify the franchisee of its decision not to renew within 90 days prior to the agreement's expiration. If a new franchise agreement isn't executed and Buildingstars hasn't provided notice of non-renewal, the agreement continues on a month-to-month basis, terminable by either party with 30 days' written notice.
In summary, a Buildingstars franchisee's business location isn't explicitly restricted geographically, but their actions are limited to protect Buildingstars's customer relationships. Compliance with these restrictions, along with adherence to the agreement's terms and timely renewal procedures, directly impacts the franchisee's ability to renew their franchise. Prospective franchisees should carefully consider these factors and the potential for changing terms upon renewal.