Is a Boulder Designs franchisee allowed to refer prospective customers to a former franchisee?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee acknowledges that Former Franchisees are in a position to compete unfairly with Franchisor, Franchisee and/or other members of the System, and cause great injury to the reputation of the System and/or the Proprietary Marks. Franchisee therefore agrees as follows:
- ii. Franchisee will not refer prospective Customers to any Former Franchisee;
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Boulder Designs' 2025 Franchise Disclosure Document, franchisees are prohibited from referring prospective customers to former franchisees. This restriction is part of a broader effort by Boulder Designs to protect its brand and maintain a fair competitive environment within its franchise system.
Boulder Designs places this restriction on current franchisees because former franchisees are seen as potential competitors who could unfairly leverage confidential business information or the brand's reputation. By preventing current franchisees from directing new customers to former franchisees, Boulder Designs aims to minimize any potential harm to the system's reputation and the proprietary marks associated with the brand.
This type of restriction is not uncommon in franchising, as franchisors often include clauses in their franchise agreements to protect their business interests and maintain brand consistency. Prospective Boulder Designs franchisees should be aware of this limitation and factor it into their business practices, ensuring they do not violate this agreement by referring customers to former franchisees.