Does Buildingstars have the right to approve any transfer of the Buildingstars franchise?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
B. By FRANCHISEE. BUILDINGSTARS has the right to reasonably disapprove any person or entity would have actual, legal or effective control over the Business and shall have the right to approve any Transfer. Consent to a Transfer shall not be deemed a waiver of BUILDINGSTARS' right to consent to any subsequent Transfers. BUILDINGSTARS will approve a sale, Transfer or change in ownership under the following conditions:
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- Governmental Compliance. The Transfer is conducted in compliance with applicable laws and regulations and the transferee has all permits and licenses necessary to operate the Business;
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- Prior Compliance. The FRANCHISEE has performed its obligations and duties under this Agreement and FRANCHISEE is not in default under this Agreement, or any other agreement with BUILDINGSTARS;
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Payments.
The transferor has satisfied all of its monetary obligations to BUILDINGSTARS, BUILDINGSTARS' Affiliates and suppliers under this Agreement and all other agreements it has with BUILDINGSTARS;
Release.
The FRANCHISEE, including all officers, directors and shareholders (as well as all guarantors under this Agreement) must execute a general release, in the form which we approve, of any and all claims against BUILDINGSTARS, BUILDINGSTARS' Affiliates, and their respective officers, directors, employees and agents;
Requirements of Transferee.
The transferee meets the established standards for new franchisees, is of good moral character, has a good credit rating, sufficient financial resources to operate the business and competent qualifications.
The transferee must execute a new Franchise Agreement with the standard terms and conditions then being offered in the FRANCHISEE'S state by BUILDINGSTARS and the owners must execute a personal guarantee.
Notwithstanding anything herein to the contrary, under no circumstances will BUILDINGSTARS be obligated to replace any customer accounts that have been transferred pursuant to the Transfer of Interest.
Transfer Fee.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars' 2025 Franchise Disclosure Document, Buildingstars retains the right to approve any transfer of its franchise. Buildingstars also has the right to reasonably disapprove any person or entity that would have actual, legal, or effective control over the business. This means that if a franchisee wishes to sell their franchise or transfer ownership, Buildingstars has the final say in whether the transfer is approved. This provision is typical in franchising, as it allows the franchisor to maintain standards and protect the brand.
Buildingstars will approve a transfer if certain conditions are met. These conditions include compliance with governmental laws and regulations, the franchisee's prior compliance with their obligations to Buildingstars, and satisfaction of all monetary obligations to Buildingstars and its affiliates. Additionally, the franchisee must execute a general release of claims against Buildingstars. The prospective transferee must also meet Buildingstars' standards for new franchisees, including demonstrating good moral character, a good credit rating, sufficient financial resources, and competent qualifications. The transferee will also need to execute a new Franchise Agreement with Buildingstars and provide a personal guarantee.
Furthermore, Buildingstars can withhold consent if the purchase price or terms of the sale are not economically feasible for the proposed assignee, in Buildingstars' reasonable judgment. Buildingstars may notify the franchisee of the reasons for withholding approval. However, Buildingstars' approval does not imply any warranty regarding the economic feasibility of the purchase price or terms of sale. This protects Buildingstars from liability related to the financial aspects of the transfer, placing the onus on the franchisee and transferee to ensure the deal is sound.
In the event of the franchisee's death or incapacity, the franchisee may appoint a designated heir to continue operating the franchise, provided the heir meets the qualifications of new franchisees. No transfer fee will be charged in this case. Buildingstars also retains a right of first refusal, allowing it to acquire the franchise interest for the same price and terms as any bona fide offer received by the franchisee. This provision gives Buildingstars further control over who enters the system and ensures that the brand's standards are maintained even in transfer situations.