Are there any restrictions on Buildingstars' right to assign the franchise agreement?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | SECTION IN FRANCHISE AGREEMENT | SUMMARY |
|---|---|---|
| 1 year for Technician's Franchise Agreement; 3 years for On-Site Manager | ||
| a. Term of the franchise | Section V | Franchise Agreement and 5 years for Corporate Franchise Agreement. |
| b. Renewal or extension | Section V | 3 renewals for 1 year each for Technician Franchise Agreement, however, if a new franchise agreement is not signed, the original franchise agreement continues on a month-to-month basis; 3 renewals for 3 years each for On-Site Manager Franchise Agreement and 3 renewals of 5 years each for Corporate Franchise Agreement - all subject to terms of Section V of the Franchise Agreement. |
| c. Requirement for franchisee to renew or extend | Section V | Give notice, sign the then current franchise agreement, and pay a renewal fee. The then current franchise agreement may contain terms and conditions materially different from those in your previous franchise agreement, such as different fee requirements. Corporate Program franchises must also have been in full compliance with the Minimum Revenue Requirements. |
| d. Termination by franchisee | Section XI.B | If we breach agreement and do not cure or attempt to cure after notice |
| e. Termination by franchisor without cause | Not Applicable | Not Applicable |
| f. Termination by franchisor with cause | Sections XI.A | If you don't satisfactorily complete training or generally if you breach agreement |
| g. "Cause" defined- curable defaults | Section XI.A | You have 10 days to cure monetary defaults and failure to comply with the Conditions of Grant under the Technician Franchise Agreement and 30 days to cure all others except those listed in Sect. XI.A.3 of the Franchise Agreement. |
| h. "Cause" defined – non-curable defaults | Section XI.A.3 | Non-curable defaults: conviction of a felony, repeated defaults even if cured, failing to comply with the Minimum Revenue Requirement, bankruptcy, fraud, issuance of 2 or more insufficient funds checks and abandonment |
| I. Franchisee's obligation on termination or non-renewal | Section XIII | Complete de-identification and payment of amounts due, return materials, Manual, direct transfer of phone |
| j. Assignment of contract by franchisor | Section XIII.A | No restrictions on right to assign |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 29–31)
What This Means (2025 FDD)
According to Buildingstars' 2025 Franchise Disclosure Document, Buildingstars has the right to assign the franchise agreement without any restrictions. This is explicitly stated in Item 17, which summarizes key provisions of the franchise agreement related to transfer and assignment. This means Buildingstars can transfer its rights and obligations under the franchise agreement to another party without needing the franchisee's consent or meeting specific conditions.
For a prospective franchisee, this lack of restriction on Buildingstars' assignment rights means there is a possibility that the franchisee could be dealing with a completely different franchisor during the term of the agreement. The new franchisor could have different management styles, business strategies, or financial resources, which could impact the franchisee's business. While the terms of the franchise agreement should remain the same, the level of support and the overall franchisor-franchisee relationship could change significantly.
In the franchise industry, it is not uncommon for franchisors to have the right to assign the franchise agreement, as this allows them flexibility in structuring their business and potentially selling the franchise system. However, some franchise agreements may include provisions that offer some protection to franchisees, such as requiring the new assignee to be financially stable or have experience in the relevant industry. The Buildingstars franchise agreement does not appear to have such protections.
Therefore, prospective Buildingstars franchisees should carefully consider the implications of Buildingstars' unrestricted right to assign the franchise agreement and assess their comfort level with the possibility of a change in franchisor during the term of their franchise agreement. It would be prudent to discuss this issue with existing Buildingstars franchisees to understand their experiences and perspectives.