What are the two components that make up the Initial Franchise Fee for a Buildingstars franchise?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
arks or the System or different systems anywhere, including within and outside of the Area. BUILDINGSTARS and its Affiliates are also authorized to sell some or all of the products and services authorized for sale by the Business in any channel of distribution, including but not limited to the wholesale sales of products and/or to provide management and/or consulting services using the System and/or the Marks.
III. INITIAL FRANCHISE FEE
The Initial Franchise Fee consists of two separate fees: a fixed fee ("Base Fee") and a variable fee ("MCR Fee"). The Base Fee is $3,995. The MCR Fee is 150% of the Monthly Contract Revenue. The MCR Fee is $3,000 ($2,000 Monthly Contract Revenue x 150%).
If FRANCHISEE is not already a Technician Program franchisee, FRANCHISEE must pay the BUILDINGSTARS the Initial Franchise Fee in full when the Franchise Agreement is signed. If FRANCHISEE is in good standing under its Technician Program Franchise Agreement, the initial franchise fee paid under the Technician Program Franchise Agreement will be credited against the Initial Franchise Fee ("Technician Credit"). FRANCHISEE will either pay BUILDINGSTARS the balance of the Initial Franchise Fee upon execution of this Agreement or pay a portion of the Initial Franchise Fee and sign a promissory note for the balance upon execution of this Agreement.
The following outlines the calculation and payment of the Initial Franchise Fee although it does not include the Technician Credit, if any;
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars' 2025 Franchise Disclosure Document, the initial franchise fee is comprised of two distinct parts: a fixed Base Fee and a variable MCR Fee. The MCR Fee is dependent on the Monthly Contract Revenue. For the On-Site Manager Program, the Base Fee is $3,995, while the MCR Fee is 150% of the Monthly Contract Revenue. As an example, if the Monthly Contract Revenue is $2,000, the MCR Fee would be $3,000. For the standard program, the Base Fee is $6,995 and the MCR Fee is 300% of the Monthly Contract Revenue. As an example, if the Monthly Contract Revenue is $10,000, the MCR fee would be $30,000.
For prospective Buildingstars franchisees, understanding the breakdown of these fees is crucial for financial planning. The Base Fee provides a fixed cost component, while the MCR Fee introduces variability based on the revenue generated from customer contracts. This structure means that the initial investment can vary significantly depending on the anticipated or secured monthly contract revenue.
It's important to note that the FDD also mentions potential credits against the Initial Franchise Fee for existing franchisees transitioning from the Technician Program or On-Site Manager Program. These credits can offset the initial investment, making it more accessible for existing franchisees to expand their operations within the Buildingstars system. Franchisees should carefully review their specific circumstances and eligibility for any such credits to accurately assess their initial investment requirements.