Can Boulder Designs offset any amounts owed by the franchisee against the purchase price of the equipment?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
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; the next monthly Royalty Fee payment will take place on the first business day of the calendar month which follows the month in which this Agreement was executed. Other than increases described in the Key Terms Page, Franchisor reserves the right to increase the Royalty Fee up to 30% over the Term of this Agreement. Franchisee shall have 30 days advance notice prior to the increased Royalty Fee taking effect.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Boulder Designs' 2025 Franchise Disclosure Document, franchisees are required to pay royalty fees to Boulder Designs without any offset, credit, or deduction. Specifically, Section 3.2 of the franchise agreement states that royalty fees must be paid to Boulder Designs without any reductions. This requirement begins on the date stated on the Key Terms Page and continues on the first business day of each calendar month for as long as the agreement is in effect. The first royalty fee payment is due upon execution of the agreement, with subsequent payments due on the first business day of the following month. Boulder Designs also reserves the right to increase the royalty fee by up to 30% over the term of the agreement, providing franchisees with 30 days' advance notice.
This means a Boulder Designs franchisee cannot deduct any amounts they might believe are owed to them from their royalty payments. This "no offset" clause is a fairly standard provision in franchise agreements, designed to ensure a consistent revenue stream for the franchisor.
While the FDD excerpt explicitly prohibits offsetting royalty fees, it does not directly address whether a franchisee can offset amounts owed against the purchase price of equipment. Therefore, it is essential for a prospective franchisee to clarify with Boulder Designs whether any form of offset is permissible against equipment purchases. Understanding the payment terms and any potential financing options for equipment is crucial before entering into the franchise agreement.