Does Buildingstars have the right to audit the franchisee's business operations?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
- I.
Right to Audit.
BUILDINGSTARS may, from time to time, cause one or more complete audits to be made of the affairs and records relating to the operations of the Business.
Upon request by BUILDINGSTARS, FRANCHISEE shall make such books, records and information available to BUILDINGSTARS or its designated representative at all reasonable times for review and audit by BUILDINGSTARS at FRANCHISEE'S place of business.
If it is found that FRANCHISEE underreported Gross Sales, FRANCHISEE will reimburse BUILDINGSTARS for the amount of the Account Sales Fees, Administration Fees, Royalty Fees, and Insurance Program Fees, if applicable, that would have been billed had billings been reported accurately, plus interest on those amounts at the rate of the lesser of one and one-half percent (1-1/2%) per month or the maximum legal rate in the jurisdiction where the Business is located.
In addition, in the event that an audit by BUILDINGSTARS results in a determination that any or all of the Account Sales Fee, Administration Fees, Royalty Fees and Insurance Program Fees, if applicable, paid to BUILDINGSTARS are deficient (underpaid) by more than two percent (2%), the FRANCHISEE shall promptly pay to BUILDINGSTARS any amounts shown to be due and all costs and expenses incurred by BUILDINGSTARS in conducting the subsequent audit to determine that the FRANCHISEE is reporting correctly (not the audit which disclosed the original deficiency), including salaries of BUILDINGSTARS' representatives, travel costs, room and board and audit fees.
Nothing contained herein shall constitute an agreement by BUILDINGSTARS to accept any payments after the same are due or commitment by BUILDINGSTARS to extend credit to or otherwise finance the FRANCHISEE'S operation of the Business.
The obligations of this provision survive termination or expiration of the Agreement.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, Buildingstars retains the right to audit a franchisee's business operations. Buildingstars may initiate one or more complete audits of the franchisee's business records. The franchisee is obligated to provide access to all relevant books, records, and information to Buildingstars or its representatives at the franchisee's place of business during reasonable times for review and auditing.
If an audit reveals that the franchisee has underreported gross sales, the franchisee is responsible for reimbursing Buildingstars for the underpaid amount of Account Sales Fees, Administration Fees, Royalty Fees, and Insurance Program Fees, along with interest. The interest rate will be the lesser of 1.5% per month or the maximum legal rate applicable in the jurisdiction where the business is located.
Furthermore, if an audit determines that any of the Account Sales Fee, Administration Fees, Royalty Fees, and Insurance Program Fees paid to Buildingstars are deficient by more than 2%, the franchisee must promptly pay the deficient amount. The franchisee is also responsible for covering all costs and expenses incurred by Buildingstars in conducting a subsequent audit to verify correct reporting. These costs may include salaries of Buildingstars' representatives, travel costs, room and board, and audit fees. These obligations remain even after the termination or expiration of the Franchise Agreement.