Does Buildingstars have the right to disapprove of a person or entity that would have control over the Buildingstars business during a transfer?
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 reasonably disapprove of any individual or entity that would assume actual, legal, or effective control over the Buildingstars business during a transfer. Buildingstars also maintains the right to approve any transfer of the franchise. This ensures that Buildingstars can maintain standards and protect its brand by vetting potential new controlling parties.
For a Buildingstars franchisee, this means that selling or transferring the franchise is not a completely independent decision. Buildingstars has the power to reject a potential buyer or controlling entity if they don't meet the company's standards. This could potentially complicate the sale process or limit the pool of potential buyers.
Buildingstars will approve a transfer if certain conditions are met. These conditions include compliance with laws and regulations, the franchisee's prior compliance with their agreement, satisfaction of all monetary obligations to Buildingstars and its affiliates, the execution of a general release of claims against Buildingstars, and the transferee meeting the standards for new franchisees. The transferee must also execute a new Franchise Agreement and a personal guarantee. These conditions are fairly standard in franchising, as franchisors typically want to ensure that any new franchisee meets their operational and financial criteria.