What constitutes abandonment of the Boulder Designs franchised business?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
Section 5.4 Failure to Begin Operations
Should Franchisee fail to begin operating the Franchised Business within 180 days after the Effective Date, Franchisor has the right to terminate this Agreement with no refund to Franchisee of any amounts if Franchisee fails to cure such default within a thirty (30) day period.
Section 5.5 Opening
Before opening the Franchised Business and commencing business, Franchisee must:
i. fulfill all of its obligations pursuant to the other provisions of this Section 5.6;
- ii. furnish Franchisor with copies of all insurance policies required by this Agreement and by the lease (if the Approved Location is leased), or such other evidence of insurance coverage and payment of premiums as Franchisor may request;
- iii. complete initial training to the satisfaction of Franchisor;
- iv. hire and train the personnel necessary or required for the operation of the Franchised Business;
- v. obtain all necessary permits and licenses;
- vi. purchase all Opening Project inventory not purchased pursuant to Section 5.4, as stated in Section 8.2;
- vii. if Franchisee is a business entity, Franchisee has caused each of its stock certificates or other ownership interest certificates to be conspicuously endorsed upon the face thereof a statement in a form satisfactory to Franchisor that such ownership interest is held subject to, and that further assignment or transfer thereof is subject to, all restrictions imposed upon transfers and assignments by this Agreement; and
- viii. pay in full all amounts due to Franchisor, or execute the Promissory Note and Security Agreement (attached hereto as Exhibit 9, if applicable) for any amounts due Franchisor.
Franchisee shall comply with these conditions and be prepared to continuously operate the Franchised Business within 180 days after the Effective Date. Time is of the essence.
5.5.1 BY VIRTUE OF COMMENCING OPERATIONS OF YOUR BUSINESS, FRANCHISEE ACKNOWLEDGES THAT FRANCHISOR HAS FULFILLED ALL OF ITS OBLIGATIONS TO FRANCHISEE THAT FRANCHISOR IS REQUIRED TO FULFILL PRIOR TO THE OPENING OF YOUR BOULDER DESIGNS BUSINESS.
Section 5.6 Use of Approved Location
Franchisee shall not use the Approved Location for any purpose other than for the operation of a BOULDER DESIGNS Business in full compliance with this Agreement and the Manual.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, a Boulder Designs franchisee can be considered to have abandoned the business if they fail to begin operating the franchised business within 180 days after the effective date of the Franchise Agreement. In such a case, Boulder Designs has the right to terminate the agreement, and the franchisee will not receive a refund of any amounts paid, provided the franchisee does not cure the failure to begin operations within a 30-day period. This clause emphasizes the importance of timely commencement of operations after the franchise agreement is signed.
Before opening the Boulder Designs franchised business, the franchisee must fulfill several obligations. These include furnishing copies of all required insurance policies, completing initial training to Boulder Designs' satisfaction, hiring and training necessary personnel, obtaining all necessary permits and licenses, purchasing all opening project inventory, ensuring that ownership interest certificates are properly endorsed if the franchisee is a business entity, and paying all amounts due to Boulder Designs. Compliance with these conditions is essential for the franchisee to be prepared to continuously operate the franchised business within the stipulated 180-day timeframe.
The franchise agreement also stipulates that the franchisee must use the approved location solely for the operation of a Boulder Designs business in full compliance with the agreement and the manual. This means the franchisee cannot operate any other business from the approved location. Additionally, for franchisees with a brick and mortar location, they must keep the franchised business open during normal business hours and on the days specified in the manual or as specified by Boulder Designs. These requirements ensure that the franchisee is actively engaged in operating the Boulder Designs business and adhering to the franchisor's standards.
Prospective Boulder Designs franchisees should be aware of these requirements and ensure they can meet all obligations within the specified timeframes to avoid potential termination of the franchise agreement and loss of investment. It is crucial to have a clear understanding of the initial steps and ongoing operational requirements to maintain a successful Boulder Designs franchise.