What are the consequences of a Boulder Designs franchisee conducting wholesale transactions without approval?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
to wholesale customers. Conducting wholesale transactions without our prior written approval is a material breach of the franchise agreement, for which we may terminate the franchise agreement without an opportunity to cure. Whether retail or wholesale, you may not offer or sell products or services outside of your Territory without prior written approval from us, and we may terminate our permission at any time with 10 days' notice, and your sale of such products and services may not interfere with any national accounts. If your sale of products and services to wholesale customers interferes with national accounts, you must immediately stop offering such products and services upon our request. You shall use your best efforts to maximize sales within your Territory, and you may not directly solicit or advertise outside of the Territory, including on the Internet, without our prior written consent.
You may accept orders outside your Territory with certain restrictions. If such product request is received outside of your Territory, retails less than $2,000, and that Territory is not owned/operated by another franchisee, you may retain all gross revenue associated with the sale and production provided such revenue will be subject to fees due in the franchise agreement. If the product retails over $2,000, and that Territory is not owned/operated by another franchisee, then you must pay 100% of the retail price to the Franchisor.
Source: Item 12 — TERRITORY (FDD pages 32–34)
What This Means (2025 FDD)
According to Boulder Designs' 2025 Franchise Disclosure Document, conducting wholesale transactions without prior written approval constitutes a material breach of the franchise agreement, potentially leading to termination of the agreement without an opportunity to rectify the situation. A "wholesale" transaction is defined as selling five or more products or services to a customer who intends to resell them to a third party. This restriction applies regardless of the stage of completion of the products.
This policy is significant for prospective Boulder Designs franchisees because it strictly limits their business activities to retail sales unless they obtain explicit permission from Boulder Designs for wholesale transactions. The franchisor maintains control over distribution channels and seeks to prevent unauthorized resale activities that could undermine the brand or conflict with other agreements.
Franchisees need to be aware of this restriction and ensure they adhere to it to avoid the severe consequence of franchise termination. Obtaining written consent for any potential wholesale activities is crucial for maintaining compliance with the franchise agreement. This also highlights the importance of clear communication with Boulder Designs regarding any business plans that may involve sales outside of direct retail to end consumers.