Can Buildingstars terminate the franchise immediately if the franchisee engages in fraudulent activity?
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 engages in fraudulent activity, provided that state law permits such immediate termination. This is without an opportunity to cure the issue. The fraudulent activity must materially and adversely affect the operation, maintenance, reputation, or goodwill of the franchise.
This immediate termination clause is significant for prospective franchisees. It means that engaging in any form of fraudulent activity, even if it seems minor, could lead to the immediate loss of their franchise. Franchisees should ensure they fully understand what constitutes fraudulent activity under the agreement and applicable state laws.
It is important to note that this immediate termination is contingent on state law. Some states may require a notice and cure period even in cases of fraud. Therefore, franchisees need to be aware of the specific laws in their state regarding franchise terminations. Buildingstars also has the right to terminate the franchise immediately if the 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; (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.
In addition to immediate termination for fraudulent activity, Buildingstars also has grounds for termination with either a 30-day or 10-day opportunity to cure, depending on the nature of the default. Franchisees should carefully review the entire termination section of the franchise agreement to understand all the circumstances under which Buildingstars can terminate the agreement.