Why is the payment of the initial franchise fee deferred for Boulder Designs franchisees?

According to Boulder Designs's 2025 Franchise Disclosure Document, the payment of the initial franchise fee is deferred until Boulder Designs has met its initial obligations to the franchisee and the franchisee has commenced business. This means a new Boulder Designs franchisee does not have to pay the initial franchise fee upfront. Instead, the franchisee can delay payment until Boulder Designs fulfills its pre-opening obligations, and the franchisee actually starts operating their business.

This deferral benefits the franchisee by reducing the initial financial burden and risk. It ensures that the franchisee only pays the fee after Boulder Designs has provided the necessary support and the franchisee is ready to start generating revenue. This arrangement aligns the interests of both parties, as Boulder Designs is incentivized to provide timely and effective support to get the franchisee's business up and running.

Section 5.5.1 of the franchise agreement further clarifies that by commencing operations, the franchisee acknowledges that Boulder Designs has fulfilled all of its obligations required prior to the opening of the Boulder Designs business. This acknowledgement likely triggers the obligation to pay the initial franchise fee. Prospective franchisees should carefully review Section 3.1 of the Franchise Agreement and Exhibit 1, Key Terms Page, to fully understand the specific obligations of Boulder Designs and the payment terms for the initial franchise fee.