What happens to the Boulder Designs Promissory Note if the Franchise Agreement is terminated?

According to Boulder Designs's 2025 Franchise Disclosure Document, if Boulder Designs terminates the Franchise Agreement for reasons stated in Section 16.2 of the Franchise Agreement, or if the franchisee fails to make a payment of principal or interest when due and this failure continues for ten days, Boulder Designs has the right to declare the entire unpaid principal balance and all accrued but unpaid interest on the Promissory Note immediately due and payable without notice or demand. Additionally, Boulder Designs can foreclose all liens and security interests securing the note.

This means that a Boulder Designs franchisee who has financed a portion of their franchise fee or other obligations through a Promissory Note with Boulder Designs faces significant financial risk if the Franchise Agreement is terminated, either due to their own default or due to specific reasons outlined in Section 16.2 of the Franchise Agreement. The entire outstanding balance on the note becomes immediately due, potentially creating a substantial financial burden.

This clause is a standard protection for franchisors, allowing them to recoup outstanding debts quickly if the franchise relationship ends prematurely. Prospective Boulder Designs franchisees should carefully review Section 16.2 of the Franchise Agreement to understand the specific termination clauses that could trigger this acceleration of the Promissory Note. They should also ensure they have sufficient financial resources to cover the outstanding balance should termination occur.