Can Buildingstars withhold consent to a transfer if the purchase price is not economically feasible?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
Although BUILDINGSTARS will not be required to determine the value of business upon a Transfer, if in BUILDINGSTARS' reasonable judgment, the purchase price or terms of the sale are not economically feasible to the proposed assignee, BUILDINGSTARS can withhold its consent to such an assignment or Transfer.
Further, BUILDINGSTARS may, in good faith, notify FRANCHISEE, stating the reasons that BUILDINGSTARS has elected to withhold approval of the proposed Transfer.
Notwithstanding the foregoing, BUILDINGSTARS' approval of the Transfer shall not be deemed to imply or warrant that the purchase price or terms of sale are economically feasible, and BUILDINGSTARS hereby disclaims any responsibility for making any such determination.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars' 2025 Franchise Disclosure Document, Buildingstars has the right to withhold consent to a franchise transfer if the purchase price or terms of the sale are not economically feasible to the proposed assignee, in Buildingstars' reasonable judgment. However, Buildingstars is not required to determine the value of the business during a transfer.
This means that if Buildingstars believes the financial terms of the transfer are unreasonable for the buyer, they can block the sale. This protects the brand by ensuring new franchisees are set up for success. However, Buildingstars is not obligated to actively assess the business's value or ensure the deal is financially sound.
Buildingstars may notify the franchisee in good faith, stating the reasons for withholding approval of the proposed transfer. However, Buildingstars' approval of the transfer does not imply or warrant that the purchase price or terms of sale are economically feasible, and Buildingstars disclaims any responsibility for making such a determination. This places the onus on both the seller and buyer to ensure the financial viability of the transaction, with Buildingstars retaining the right to veto if it deems the terms unreasonable.