Can Buildingstars terminate the franchise immediately if the franchisee declares bankruptcy?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
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) failing to generate the Minimum Revenue Requirement in any month; or (g) any other act or omission which permits termination without notice and/or an opportunity to cure under applicable state law.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, Buildingstars can terminate the franchise agreement immediately if the franchisee declares bankruptcy or becomes insolvent, but this is contingent on state law. Specifically, if state law permits, Buildingstars can terminate the franchise immediately upon notice if the franchisee declares bankruptcy or insolvency.
This means that a Buildingstars franchisee's rights can be terminated immediately without an opportunity to cure the default if they declare bankruptcy. This is a significant risk for franchisees, as financial instability can lead to immediate termination of the franchise agreement.
It is important to note that this immediate termination is subject to applicable state law. Therefore, a prospective Buildingstars franchisee should consult with an attorney to understand the specific laws in their state regarding franchise termination due to bankruptcy or insolvency.