What legal rights does a Boulder Designs franchisee lose upon default of the financing agreement?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
| Item Financed (Source) | Amount Financed | Down Payment | Max. Term (years) | Annual % Rate of Interest | Monthly Payment | Pre payme nt Penalty | Security Required | Liability upon Default | Loss of Legal Right on Default |
|---|---|---|---|---|---|---|---|---|---|
| Equipment and Supplies Package | Up to 50% of the cost of the package if it is new equipment, including any upgrades; up to 75% of the cost of the package if it is used or refurbished equipment | Depends on credit rating | 42 months | 8.5% | Principal and interest amortized over 42 months | None | Personal Guaranty; Security Agreeme nt | Call loan; Repossess equipment; Terminate franchise agreement | Waive demand, presentment for payment protest, notice of intent to accelerate, notice of acceleration |
Source: Item 10 — FINANCING (FDD pages 23–24)
What This Means (2025 FDD)
According to Boulder Designs' 2025 Franchise Disclosure Document, a franchisee who defaults on their financing agreement with Boulder Designs waives certain legal rights. Specifically, the franchisee waives their rights to demand, presentment for payment protest, notice of intent to accelerate, and notice of acceleration. This means that if a franchisee fails to make timely payments, Boulder Designs is not obligated to formally demand payment, present a protest, or provide advance notice before accelerating the loan (demanding immediate payment of the full outstanding balance).
Furthermore, the Promissory Note states that the franchisee waives their rights to notice of a collection action and to assert any defenses against collection. This implies that Boulder Designs can pursue legal action to recover the debt without prior notification and that the franchisee may be limited in their ability to raise defenses in court. Boulder Designs also retains the right to terminate the franchise agreement if payments are not made on time, adding another layer of risk for the franchisee.
It is important to note that Boulder Designs may discount the promissory notes to a third party, who may then be immune to any defenses the franchisee might have against Boulder Designs. This means that if the financing agreement is sold to another entity, the franchisee's legal recourse could be further limited. To mitigate these risks, prospective franchisees should carefully review the Promissory Note and Security Agreement (Exhibit 9) and seek legal counsel to fully understand their rights and obligations under the financing agreement.