Does the Boulder Designs Promissory Note include any provisions for notice to the debtor?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisor terminates the Franchise Agreement dated as of the date hereof between Franchisor and (the "Franchise Agreement") for any of the reasons stated in Section 16.2 of the Franchise Agreement or, if Debtor fails to make a payment of principal, interest or any installment thereof when due, and such failure continues for a period of ten (10) days, Franchisor may declare the entire unpaid principal balance of, and all accrued but unpaid interest on, the indebtedness evidenced by this Note immediately due and payable without notice or demand, foreclose all liens and security interests securing
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Boulder Designs' 2025 Franchise Disclosure Document, under the terms of the Promissory Note, Boulder Designs Franchising, LLC can declare the entire unpaid balance and any accrued interest immediately due without notice or demand if the franchisee defaults. This can occur 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, interest, or any installment when due, and this failure continues for ten days.
This means that a Boulder Designs franchisee could face immediate and full repayment of the loan if they breach the Franchise Agreement or are even slightly late on a payment. The franchisee would not receive a formal warning or opportunity to rectify the situation beyond the initial ten-day grace period for late payments.
Typically, promissory notes include provisions for written notice and a cure period before acceleration of the debt. The absence of such provisions in the Boulder Designs note places a significant risk on the franchisee. A prospective franchisee should carefully consider this provision and seek legal counsel to fully understand the implications before signing the agreement. They may also want to negotiate for more standard notice and cure provisions to mitigate this risk.