Does the Boulder Designs Promissory Note specify what happens in the event of 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
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Boulder Designs's 2025 Franchise Disclosure Document, the Promissory Note outlines specific actions that Boulder Designs Franchising, LLC can take in the event of a default by the franchisee. The document states that if the franchisee fails to make a payment of principal, interest, or any installment when due, and this failure continues for ten days, Boulder Designs can declare the entire unpaid principal balance and all accrued but unpaid interest immediately due and payable without notice or demand.
In addition to accelerating the debt, Boulder Designs has the right to foreclose on all liens and security interests securing the note. This means Boulder Designs can seize the collateral, which includes all inventory, furniture, fixtures, equipment, and supplies, whether currently owned or acquired later, as well as any proceeds from these items. This security interest ensures that Boulder Designs has a legal claim on the franchisee's assets to recover the owed amount.
Furthermore, the note is secured by a personal guarantee from the franchisee's principal. This guarantee means that the individual is personally liable for the debt, providing Boulder Designs with an additional avenue for recovering funds in case of default. The guarantor also agrees to cover all costs, expenses, and reasonable attorney's fees incurred by Boulder Designs in enforcing the guarantee. This comprehensive approach protects Boulder Designs's financial interests in the event a franchisee fails to meet their payment obligations.