Can Boulder Designs deduct sums owed to them from the purchase price paid to the franchisee for the assets?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor up to the date of Franchisee's failure to timely commence operations of the Franchised Business and shall not be construed as nor considered to be a penalty
Section 3.2 Royalty Fees
Beginning on the date stated on the Key Terms Page and continuing on the first business day of each calendar month thereafter, for so long as this Agreement shall be in effect, Franchisee shall pay to Franchisor without offset, credit or deduction of any nature, Royalty Fees due to Franchisor. The first payment of the Royalty Fees will take place upon execution of this Agreement;
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the Boulder Designs franchise agreement addresses deductions and offsets in specific contexts, but it does not explicitly state whether Boulder Designs can deduct sums owed to them from the purchase price paid to the franchisee for the assets.
Section 3.2 of the agreement states that franchisees must pay royalty fees to Boulder Designs "without offset, credit or deduction of any nature." This clause pertains specifically to royalty fees and does not extend to the purchase price of assets. Section 17.6 states that any claim the franchisee has against Boulder Designs does not constitute a defense to the enforcement of the covenants in Article 17.
While the FDD outlines various financial obligations and potential scenarios involving payments between Boulder Designs and its franchisees, it lacks a clear provision addressing deductions from the asset purchase price. A prospective franchisee should seek clarification from Boulder Designs regarding their policy on this matter to fully understand their rights and obligations during a potential sale of assets.