Does the Boulder Designs Promissory Note specify any events that would constitute a default?
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 | | | | written replacement ACH Withdrawal Form notification from me. | | | I (We) understand that revocation of this | | | Authorization Agreement by me (Us) may constitute an event of Default under the Franchise Agreement. | | | | |
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Boulder Designs' 2025 Franchise Disclosure Document, the Promissory Note outlines specific events that constitute a default. If Boulder Designs terminates the Franchise Agreement for reasons stated in Section 16.2 of the Franchise Agreement, it is considered a default. Additionally, failure to make timely payments of principal, interest, or any installment, which continues for ten days beyond the due date, also constitutes a default.
Upon the occurrence of a default, Boulder Designs has the right to declare the entire unpaid principal balance and any accrued but unpaid interest immediately due and payable. Furthermore, Boulder Designs can foreclose on all liens and security interests securing the note without providing any prior notice or demand to the franchisee.
Additionally, the ACH Withdrawal Form includes a clause stating that revocation of the Authorization Agreement by the franchisee may constitute an event of default under the Franchise Agreement. This means that if a franchisee cancels the automatic payments, it could be considered a breach of contract, leading to potential penalties or termination of the franchise agreement.