Upon termination of the Buildingstars franchise agreement, what financial obligations does the franchisee have to Buildingstars, its affiliates, and suppliers?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon termination or expiration of this Agreement, for any reason whatsoever, all of FRANCHISEE'S rights hereunder shall terminate.
FRANCHISEE shall immediately thereafter discontinue use of all Marks, signs, colors, structures, printed goods and forms of advertising indicative of BUILDINGSTARS' business and return any copyrighted materials which have been provided to FRANCHISEE by BUILDINGSTARS, and if BUILDINGSTARS requests, shall assign its telephone numbers to BUILDINGSTARS and execute any and all documents necessary to do so.
Further, FRANCHISEE shall pay all amounts due to BUILDINGSTARS, BUILDINGSTARS' Affiliates, and suppliers.
Further, FRANCHISEE agrees to return any and all materials which contain Confidential Information in whatever form, including but not limited to the Confidential Operation Manual, to BUILDINGSTARS immediately.
FRANCHISEE'S obligations regarding Trade Secrets and Confidential Information and Non-Solicitation and Non-Competition shall remain in full force and effect in accordance with their terms, notwithstanding such termination.
FRANCHISEE will immediately cease providing services to all Customers and forfeit all rights it has to the customer accounts. Upon request of BUILDINGSTARS, FRANCHISEE will assign to BUILDINGSTARS any or all of FRANCHISEE'S customer contracts and BUILDINGSTARS will have the right to either service the accounts or assign the servicing of the accounts to others. At no such time
will FRANCHISEE terminate a written contract until proper notice has been given to BUILDINGSTARS prior to termination.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, upon termination or expiration of the Franchise Agreement, the franchisee is obligated to pay all outstanding amounts due to Buildingstars, its affiliates, and suppliers. This means that any unpaid fees, invoices, or other financial obligations must be settled. Additionally, if the franchisee, or any employee or affiliate of the franchisee, performs services for a Buildingstars customer similar to those under the Franchise Agreement within one year after termination but outside the agreement, the franchisee must pay Buildingstars a fee. This fee is equal to three times the monthly amount agreed to be paid for such services.
Furthermore, if an audit reveals that the franchisee underreported gross sales, the franchisee is responsible for reimbursing Buildingstars for the underpaid Account Sales Fees, Administration Fees, Royalty Fees, and Insurance Program Fees, if applicable. Interest will be charged on these amounts at a rate of the lesser of 1.5% per month or the maximum legal rate in the relevant jurisdiction. If the underpayment of these fees exceeds 2%, the franchisee must also cover all costs and expenses incurred by Buildingstars in conducting the audit to determine the correct reporting, including salaries of Buildingstars' representatives, travel costs, room and board, and audit fees.
These financial obligations continue even after the termination or expiration of the Franchise Agreement. It is important for prospective Buildingstars franchisees to understand these potential costs and ensure accurate financial reporting throughout the term of the agreement to avoid significant financial repercussions upon termination.