Can Boulder Designs discount the promissory notes to a third party?

According to Boulder Designs's 2025 Franchise Disclosure Document, while it is not the company's intent to do so, Boulder Designs may discount promissory notes to a third party. This is detailed in Item 10, which discusses financing options that Boulder Designs may offer to franchisees who meet their credit standards. If Boulder Designs does discount the notes, the third party may be immune to any defenses against payment that the franchisee may have against Boulder Designs.

This means that if a franchisee has a dispute with Boulder Designs, they may still be obligated to make payments to the third party holding the promissory note, even if they have a legitimate reason to withhold payment from Boulder Designs. This could put the franchisee in a difficult financial situation if they are unable to resolve the dispute with Boulder Designs while still being required to make payments on the loan.

Prospective franchisees should carefully consider this risk before accepting financing from Boulder Designs. It would be prudent to seek legal advice to fully understand the implications of this clause and to explore options for mitigating this risk. Franchisees should also inquire about the circumstances under which Boulder Designs might discount the notes and whether there are any safeguards in place to protect franchisees in such situations. Understanding these terms is crucial for making an informed decision about financing a Boulder Designs franchise.